KEY POINTS:
Australian childcare giant ABC Learning Centres has launched a big push in to New Zealand but NZX-listed Kidicorp is confident demand will keep growing for all players.
Australian Education Trust last week agreed to buy 35 childcare centres from Macquarie Leisure Services. The trust buys properties and leases
them to ABC.
The deal is conditional upon ABC completing purchase of 49 Kids First operations in New Zealand from Macquarie Leisure - which would make ABC one of the world's largest publicly traded providers.
Vin Harink, chief executive of Austock Property Management - the responsible entity for the trust - said that as ABC expanded in New Zealand the trust would be looking to acquire the properties.
"I think there are something like 1700 childcare centres in New Zealand, ABC owns 77," Harink said.
"In Australia they have a 20 per cent market share. That's not to say that they will have that in New Zealand but you would expect them to grow in New Zealand."
One trick to being successful in a property trust was to build scale and geographic spread, he added.
"When you've got broad geographic spread across Australia and New Zealand it helps in terms of the perception of risk."
ABC weren't available to discuss their plans for New Zealand yesterday.
Despite ABC's size, Kidicorp chief executive Wayne Wright expected there would be plenty of demand to go around.
"ABC's not a threat. They're just another player and a small player in quite a large market," Wright said.
There was already a shortage of places which would be boosted by Government plans to provide 20 hours of free education for three and four-year-olds as of July 1.
"So what that will mean is that a lot of children who previously weren't either getting education or certainly not getting 20 hours will be looking ... and that'll require quite a bit more capacity both in terms of physical facilities and in teachers."
Kidicorp - which runs 80 centres nationwide - bought two Montessori operations last week giving it about 6 per cent of the market but would build from now on.
Although demand was rising it was still a tough environment in which to be successful.
"The reality is it's very price sensitive," he said. "There's been a strong drive in the last 12 months on wages."
In the half-year ending September 30, Kidicorp made a trading profit of $2.2 million.
"We're hoping that with volume we'll be able to get some economies of scale that will produce profit."
ASX-listed ABC's shares closed up A4c yesterday at A$7.69, while NZX-listed Kidicorp last traded at 22c.
