Affinity Education Group

Transaction Background

Anchorage acquired Affinity through a take private in 2015. Prior to Anchorage’s acquisition, the business had been distracted by a focus on new centre acquisitions and its public company status. However, the industry was attractive, and Anchorage identified a significant opportunity to improve the business.

As part of its acquisition, Anchorage developed a comprehensive performance improvement program to leverage the full potential of Affinity’s portfolio of early education long day care centres.

Business Overview

Affinity is one of Australia’s largest providers of early education and childcare. Affinity was established in May 2013 through a roll-up strategy in a highly fragmented market. At the time of Anchorage’s acquisition, Affinity had a portfolio of ~160 centres, having grown rapidly since listing in December 2013 with a portfolio of ~60 centres.

Under Anchorage ownership, Affinity has been transformed into a market leading early education platform with a systemised and standardised national network of over 150 centres.

Turnaround Program

The key aspects of the ACP performance improvement program included:

• Integration of a distributed network through implementation of standardised systems and processes underpinned by a highly engaged culture

• Design and implementation of an industry leading, efficient and flexible labour model, providing a strong competitive advantage, delivering cost control and downside protection

• Re-alignment of fees from below market via significant investment in customer offering and focus on becoming the provider of choice to middle income families

• Leveraged the standardised platform established though the initiatives above to drive occupancy growth

• Refresh and re-alignment of internal quality process to deliver a significant uplift in industry-wide “national quality standards”

• Under ACP ownership the network was rationalised, through the sale of some long term underperforming centres.  Following the embedding of the operational improvement program and enhanced systems and processes, Affinity was able to leverage its competitive advantage and re-commence a program of centre acquisitions.

Financial Performance

Collectively, the performance improvement initiatives resulted in ~92% improvement in EBITDA during ACP’s ownership. 

Exit

Affinity was sold to funds managed by Quadrant Private Equity in September 2021.