Gresham backs Busy Bees' acquisition of Kindercare. Deal makes nursery care provider No 2 in the market

Gresham, the private equity house, has backed the acquisition by Busy Bees, the highly respected national childcare facilities company, of the Lancashire-based Kindercare group, the largest independent childcare provider in the north-west.

The deal brings to £27 million the funding that Gresham and banking group HBoS have provided in the past two years to support the company's expansion. Gresham contributed £4.65 million in this latest phase of funding.

Kindercare will add nine nurseries to the 43 already operated by Busy Bees and make it the second largest childcare provider in the UK being able to offer nearly 4000 places (May 2002 Nursery World Survey).

The two businesses are complementary. Kindercare also has an excellent reputation for its large, new build nurseries. These offer higher numbers of childcare places in the Lancashire market where Busy Bees has been under-represented to date. Kindercare co-founder, Sarah Carr, is chairman of the National Day Nursery Association. She and co-founder, Stuart Carr, are joining Busy Bees in a national management role, while Busy Bees' development director, Lynn Woodward, is to spearhead the integration of Kindercare into the Group.

The combined group operates in a fast-growing marketplace where there is a chronic shortage of day care places in the UK. According to the Day Care Trust, there is just one place available for every seven children under the age of eight.

Gresham investment director Paul Canning comments: 'The acquisition of Kindercare confirms Busy Bees' desire to be the leading quality provider of children's daycare facilities. We look forward to continuing our support for the Group's expansion plans.'

The acquisition will enable the group to develop further Kindercare's well-established after- school and holiday programme and Busy Bees' fast-growing corporate childcare voucher business and its dedicated training operations.

John Woodward, Busy Bees' managing director, explains: "Busy Bees and Kindercare are both dedicated to providing a quality service to children and parents backed by a strong commitment to staff development. The addition of Stuart and Sarah Carr's skills to our existing team, together with the financial strength provided by our funding partners, provides a strong basis for further development over the next few years."

Busy Bees' management team has also recently been strengthened by the appointment of Clare Spottiswoode, the former Director-General of Gas Supply, as non-executive chairman.

Paul Canning led the deal for Gresham together with James Barbour-Smith. They were advised by Fabrizio Carpanini of Olswang and Graham Elsworth of KPMG. HBoS provided further finance through John Carter. The Carrs were advised by Carl Houghton of Tenon Livingstone Guarantee.