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Guardian Childcare and Education to buy Morgan Stanley’s Australian childcare business ahead of PE exit – sources

Guardian Childcare and Education, backed by global private markets investor Partners Group, is buying Morgan Stanley Real Estate Investing’s (MSREI) Australian childcare business ahead of the launch of an expected sale process, according to two sources familiar with the matter.

Partners Group has hired Morgan Stanley to sell Guardian, and the investment bank has been arranging stapled debt financing to back the private equity investor’s planned exit, this news service revealed in February. The business could be worth AUD 1bn (USD 640m), as reported by local media.

Ahead of the mooted sale, Guardian has been pursuing a few bolt-on acquisitions, the first source and a third source said.

The acquisition of the childcare business from MSREI is one of those bolt-ons the company needs to complete before launching the sale process formally, according to the first source.

MSREI tapped into Australia’s childcare sector back in 2015 through its acquisition of Brisbane-based childcare centres developer and operator Australian Childcare Projects (ACP), which at the time had secured 12 new centres across the eastern seaboard of Australia.

The business bought by Guardian from MSREI is now known as Australian Childcare Centres, according to the first source. The deal would see Guardian add about 15 centres to its portfolio, the second source added.

Regarding the sale process for Guardian itself, both the first source and the third source said that the vendor is still finalizing due diligence, with the first source adding that it will not be far off from the formal launch.

Guardian, Partners Group and Morgan Stanley did not reply to requests for comment.

Sydney-based Guardian, founded in 2004, currently has more than 110 centers across Sydney, Melbourne, Canberra, Brisbane and Adelaide, according to its website. The company recorded around AUD 76m (USD 53m) in EBITDA, as reported by this news service previously.

Partners Group acquired Guardian for an enterprise value of about AUD 440m (USD 311.5m) in 2016, according to Mergermarket data.

According to Mergermarket’s Likely-to-Exit (LTE) algorithm, Guardian Childcare and Education has a score of 63 out of 100. Mergermarket‘s LTE predictive analytics assign a score to sponsor-backed companies to help track and predict when an exit could occur through M&A, an IPO, a direct listing or a de-SPAC transaction.