G8 EDUCATION LAYS PATH TO CHEAPER FINANCE

Written on the 24 October 2014 by Nick Nichols

G8 EDUCATION LAYS PATH TO CHEAPER FINANCE

PROFESSIONAL investors snapped up $100 million in G8 Education (ASX: GEM) shares this week in a move that paves the way for the childcare centre operator to tap into cheaper finance options in future.

The Gold Coast-based company, which recently has been leaning on debt markets to fund its ambitious acquisition program, has raised the funds through the issue of 20.4 million shares at $4.91 each.

G8 says it will immediately apply some of the funds to acquire 20 childcare centres for $36.7 million.

The centres will add a further 1343 childcare places to the company’s portfolio which sat just under 25,000 in 367 centres at the end of June this year.

According to managing director Chris Scott, the decision to approach equity markets to finance the latest acquisitions is a strategic one.

“We did equity this time instead of debt to strengthen the balance sheet,” he tells Gold Coast Business News.

G8 Education is understood to be in the process of being rated by one of the major ratings agencies, which would open the way for the company to tap into the institutional bond market.

G8 has previously issued bonds to high net worth investors, however institutional bonds are generally longer dated and cheaper.

The move could also see G8 Education included in the ASX 100 for the first time, which would lift its profile further on the radar of institutional investors.

Scott says he wasn’t surprised by the strength of demand for the latest share issue, which was wrapped up a day after being announced.

“This is a strong vote of confidence in G8 Education’s business model and growth prospects,” he says.

G8 Education acquired 114 childcare centres in the first half of calendar 2014, at the company’s prescribed valuation of four times earnings before interest and tax.

Scott says the availability of acquisitions delivering the required yield “remains significant”.

News of the capital raising pushed G8 Education shares lower, from $5.17 earlier this week to around $5 – but still above the share price for the latest capital raising.


Author: Nick Nichols

Latest News

Q & A WITH FACEBOOK GURU ANDY MCKEON AS HE JOINS AUSTRALIAN SOFTWARE COMPANY LIVETILES

HE was creative director at Apple under the legendary Steve Jobs, and is now a senior Facebook executive. In his n...

EAST COAST PROPERTY BOOM BUILDS PROFITS FOR BRICKWORKS

AUSTRALIA'S residential property boom has helped drive a sharp rise in first half earnings for Brickworks (ASX: B...

COLLINS SUPERSIZES IN EUROPE WITH PURCHASE OF 16 KFC RESTAURANTS IN THE NETHERLANDS

COLLINS Foods (ASX:CKF) has stepped up its European expansion through the purchase of 16 KFC restaurants in the Ne...

CSIRO HELPS DEVELOP AUSTRALIAN PHARMA COMPANY FROM $10 MILLION TO $305 MILLION

GOVERNMENT backed scientists have helped multiply the market value of a previously small Australian pharmaceutical...

Related News

RAY OF HOPE FOR SLATER AND GORDON AS LENDERS STEP IN

EMBATTLED law firm Slater and Gordon (ASX: SGH) has announced to the ASX that it has launched confidential discussion...

SPROUTX PROVIDES THE SEED FOR AGTECH STARTUPS

AGTECH innovation fund SproutX has opened applications for its first accelerator round, backed by $10 million from...

GAS PRICES MAY FORCE BRICKWORKS TO TAKE MANUFACTURING OVERSEAS

BRICKWORKS Limited (ASX:BKW) chairman Robert Millner says soaring energy prices may force the company to turn to offs...

CHINA CONTINUES TO COLLECT AUSSIE PROPERTY ASSETS

CHINESE coin continues to dominate Australia's offshore real estate investment market, accounting for almost h...

EVENTS COMING UP

 

Contact us

Email News Update Sign Up Contact Details
Subscriptions

PO Box 2087
Brisbane QLD 4001

LoginTell a FriendSign Up to Newsletter