SYDNEY: Nido Education Limited (ASX: NDO) has acquired a high-performing child care service from its incubation pipeline for $2.4 million, the company announced Friday.
The newly acquired service, which opened in August 2023 and offers 82 licensed places, is expected to contribute $500,000 in EBIT (pre-AASB16) for calendar year 2026.
The acquisition is part of Nido’s broader strategy to expand its footprint through a de-risked incubation model. Under this approach, Nido designs, commissions, and manages each service from inception, allowing for off-balance-sheet growth with minimal integration risk.
Nido currently manages 50 services on behalf of third parties, including 16 in incubation, and owns 57 services following the latest acquisition. Its development pipeline includes 42 sites under construction or in final legal stages, and another 50 sites approved for incubation.
Each incubated service is eligible for acquisition once it meets key performance metrics—specifically, an average 80% occupancy and $5,500 EBIT per licensed place over six months. Nido then has a 12-month call option to acquire the service at a 4.5x EBIT multiple.
Revenue streams for Nido include child care fees, government funding, annual management fees of up to $120,000 per service, and $250,000 establishment fees for each new incubator service.
Founded in 2021, Nido Education operates under the Nido Early School brand and continues to position itself as a national leader in early childhood education and care.