Evolve Education Group made a solid sharemarket debut yesterday, with its shares closing at an 8 per cent premium to the $1 offer price.
More than 14 million shares, worth $15.2 million, changed hands in 207 trades during the Auckland-based early childhood education provider's first day as a listed company.
The shares closed at $1.08 last night, giving the company a market capitalisation of $191.2 million.
Evolve raised $132 million through an oversubscribed initial public offer (IPO), which was used to fund the purchase of New Zealand early childhood education businesses including Lollipops Educare and Porse.
Evolve will operate 30 Lollipops ECE centres and a further 55 centres acquired from other sellers. Porse operates home-based ECE services.
Evolve has also acquired home-based childcare provider Au Pair Link.
The sell to investors has been that New Zealand's early childhood education (ECE) sector is highly fragmented and can be made more efficient and profitable through consolidation.
Chief executive Alan Wham said it would probably take until early next year to "bed-down" and integrate the businesses in its initial portfolio.
But additional acquisitions could take place as early as February or March next year, Wham said.
Major existing players in New Zealand's ECE sector include Kidicorp and Kindercare.
Kidicorp, which operates more than 250 centres under brands including ABC and Edukids, de-listed from the NZX in 2007.
Its managing director, Wayne Wright, said in a media report earlier this year that Kidicorp had already rebuffed an approach from Evolve over potential acquisitions.
"[Wright] has got a good business running there," Wham said. "He's got to determine what he wants to do."
Evolve was established in May by Greg Kern and Russell Daly of Australia's Kern Group.
Kern, who has a seat on Evolve's board, acted as an adviser to Australian childcare provider Affinity Education Group, which raised A$75 million to buy 57 childcare centres when it listed in December 2013.
Evolve has been described as an "echo" of Affinity, but Kern said the New Zealand company was an improvement on the Australian firm in terms of its structure.
He said a particularly positive aspect of Evolve was the fact that Lollipops founders Mark Finlay, Russell Thompson and Andy Scott were remaining as cornerstone shareholders in the listed company.
"Evolve is quite similar to Affinity but it is double the size that Affinity listed at," Kern said. "The other aspect is that Evolve is the only listed player in this market, whereas Affinity was secondary to G8 [Education]."
The company has forecast profit of $16.6 million from revenue of $136.2 million in the 12 months to March 2016.
A net dividend yield of 4.69 per cent has been forecast for the 2016 financial year, according to the company's prospectus.