Affinity Education Group Acquisition

Quadrant finds itself bogged down in childcare quagmire

The private equity giantmade a $650m bet on Affinity Education four years ago. Child abuse allegationsnow have the sector under an intense spotlight.

If G8 Made an offer for affinity it would make us the largestprovider of childcare in Australia!!
Interesting thought

Is this situation the catalyst for that to happen? (E.G the final straw)
--Quadrant might just go for it

https://www.abc.net.au/news/2025-05-23/educators-accuse-affinity-child-care-of-toxic-culture/105320186
https://www.reddit.com/r/australia/comments/1lqm4mi/affinity_education_google_reviews_potential_shady/
https://www.abc.net.au/news/2025-05-12/video-shows-childcare-worker-hitting-baby-at-affinity-education/105268298

In 2021, Affinity Education Group, a major early childhood education provider in Australia, was acquired by Quadrant Private Equity from Anchorage Capital for approximately $650 million. Anchorage Capital had previously taken the company private in 2015. Quadrant Private Equity is known for its investments in the early childhood education sector

Up for sale, at the right price

Ever since, Affinity has been deemed by investment bankers andcompetitors to be informally up for sale at the right price, two people withknowledge of the matter said on the condition of anonymity. Affinity, foundedin 2013, has more than 250 centres with 20,000 children.

Affinity had already been in the spotlight, among the operators featuredin an ABC investigation that detailed the mistreatment of toddlers and childrenacross NSW. The investigation uncovered breaches of staff-to-child ratios atcentres, cost-cutting incidents and the failure to report issues.

Those issues, and fears centres did not do enough to prevent the allegedsexual abuse uncovered by Victoria Police, have left parents wondering whethertoo much cost-cutting created serious problems.

One person with knowledgeof Affinity’s business model but not authorised to speak publicly said thealleged criminal activity was unlikely to be linked to cost-cutting. “Itdestroys the business if you don’t get it right,” he said. “No matter whatcosts you put into it, you couldn’t have prevented these events.”


Full Article below from financial review July 3, 2025 – 8.00pm


Quadrant Private Equity should have seen the warning signs. Bain Capital wentall in on childcare locally in 2016, when it bought Camp Australia for $400million. Six years later, it was handing the keys to lenders and exiting withlittle to show for its efforts. Even before that, ABC Learning had been aposter child for how not to run a company when it collapsed in 2008.ButQuadrant’s executive chairman Chris Hadley is among the country’s best-knownprivate equity investors, and his dealmakers have had plenty of success inother sectors. It was that track record, perhaps, that prompted Quadrant toproceed with the purchase of Affinity Education in 2021, paying $650million to make its debut investment in the childcare sector.The $20 billionsector ticked many boxes – high demand for childcare services, the potential toroll up small businesses into a larger company and plenty of government fundingfor the sector. There were risks, but promising returns over thethree-to-seven-year private equity timeframe.Joshua Dale Brown, 26, has beenaccused of child sex abuse. Unfortunately for Quadrant, Affinity’s centresare now in the spotlight after Victoria Police this week charged childcareworker Joshua Dale Brown, 26, with dozens of offences for abusing eightchildren between the ages of five months and two years old. He had worked at 12Affinity centres, and another four run by ASX-listed childcare operator G8Education.While there is no suggestion of wrongdoing by Affinity or G8, thecharges have already prompted separate and urgent reviews into the childcaresector by two state governments – Victoria and Western Australia.Speaking inMelbourne on Thursday, Housing Minister Clare O’Neil said it was clear thechildcare system was not working properly.“This is clearly a national problemthat is going to get the proper attention it deserves,” O’Neil said, althoughshe declined to comment on whether the government had a particular issue withhow private equity ran centres.For Quadrant, that means being stuck in an investmentthat is at risk of significant government intervention. How investors see thisis clear in the G8 share price – down 7.4 per cent to 99¢ on Thursdayafternoon, compared to a steady day’s trading in the S&P/ASX 200. G8 stockis down 16 per cent this week alone; other smaller listed childcare providershave fared better, with Embark Early Education down 3 per cent and NidoEducation flat.In an ASX statement, G8 said the allegations relating to Brownwere “extremely distressing”, but the former employee had undergone therequired background checks for working with children.Brokers are worried thatbusiness will get tougher as state and federal governments demand moresafeguards. “The market is coming to terms with any potential reputation damage(for G8) and the potential for more government intervention,” said RBC CapitalMarkets’ Wei-Weng Chen.In a note to clients, MA Moelis downgraded earningsexpectations at G8 – which has more than 400 child care centres, preschools andkindergartens – not only for 2025, but for the next two years along with it.“Webelieve the recent Creative Garden Point Cook Childcare Centre incidentpresents an increasing risk to both occupancy improvements and potentialfurther regulatory risks to both G8 and the broader sector,” Moelis analyst TomTweedie said, a reference to the centre where Brown worked.For Quadrant, anydeterioration in the childcare sector’s outlook is an added headache – the firmhad already tried to sell Affinity with no success in 2023. At the time, TheAustralian Financial Review reported the sale process had been put onhold to allow the industry time to digest the contents of the competitionregulator’s inquiry into the sector. (The review last year concluded there waslittle evidence of profiteering from private operators and one in fourcompanies made meagre or negative returns.)Up for sale, at the right priceEversince, Affinity has been deemed by investment bankers and competitors to beinformally up for sale at the right price, two people with knowledge of thematter said on the condition of anonymity. Affinity, founded in 2013, has morethan 250 centres with 20,000 children.Affinity had already been in thespotlight, among the operators featured in an ABC investigation that detailedthe mistreatment of toddlers and children across NSW. The investigationuncovered breaches of staff-to-child ratios at centres, cost-cutting incidentsand the failure to report issues.Those issues, and fears centres did not doenough to prevent the alleged sexual abuse uncovered by Victoria Police, haveleft parents wondering whether too much cost-cutting created seriousproblems.One person with knowledge of Affinity’s business model but notauthorised to speak publicly said the alleged criminal activity was unlikely tobe linked to cost-cutting. “It destroys the business if you don’t get itright,” he said. “No matter what costs you put into it, you couldn’t haveprevented these events.”An Affinity spokeswoman this week said the companywelcomed any review of regulation that strengthened safeguards and enhancedaccountability. As well as Affinity, Quadrant owns a stake in Junior AdventureGroup, a provider of care for children outside of school hours.Bain Capital,one of the first big private equity firms to enter the childcare space when itsnapped up Camp Australia, an out-of-hours school care provider, quickly foundout how hard it is to shake reputation issues.Even as it prepared to buy thecompany, Camp Australia was reporting that children at one of its West Australiansites were not adequately supervised. In 2015, it was fined after not lodging atimely report on the disappearance of a child who had walked home.Ultimately,these issues saw the company declared ineligible to tender or receive newlicences in NSW.Why investors pile into childcareDespite the risks, privateequity and pension firms have piled into childcare.Californian private equityfirm Seidler Equity Partners in May acquired a minority stake in YoungAcademics, which runs 40 centres in Sydney. Alceon Private Equity owns part ofNido Education, an ASX-listed operator which manages around 100 centres.Ontario Teachers’ Pension Plan invested in early childhood education providerBusy Bees in 2013.Bain, which had a torrid time with Camp Australia, has hadsuccess in the sector. Three years ago, it sold another early educationbusiness, Only About Children, to Bright Horizons Family Solutions, an Americanoperator, for $450 million.And there are good reasons why some analysts remainupbeat – there’s plentiful government funding, at least while Labor is inpower.“Childcare was a big part of the Albanese government’s election platform,and they’re looking to potentially expand that to universal childcare,” RBC’sChen said. “High levels of government support are part of the attractiveness.”