Oregon Business – What happened to the KinderCare IPO?
The Portland-based childcare giant cited “regulatory delays” when it pulled its IPO.
In 1969, a property developer named Perry Mendel opened KinderCare Nursery Schools, claiming that increasing numbers of women entering the workforce would create new markets for childcare.
Three years and a name change later, KinderCare Learning Centers went public.
In the 1980s, the company – after a diversification plan that included acquiring shoe stores, photo studios and even an overseas fertilizer manufacturer – filed for bankruptcy and was later acquired by Knowledge Universe, based in Portland, which changed name at KinderCare Education in 2016.
In October, the company disclosed it would follow a number of Oregon companies to the New York Stock Exchange bell with an initial public offering. On November 18, the day the IPO was scheduled, the company released an announcement stating that it would postpone a day. The next morning, a second announcement came out: there would ultimately be no public offer.
RELATED STORY: Vacasa and Dutch Bros Go Public
“Throughout our quest for an initial public offering (IPO), we have received strong investor interest and positive feedback about KinderCare’s potential,” the statement said. “Unfortunately, due to regulatory delays beyond our control, we have decided to postpone our IPO. This is a real disappointment, as the IPO was going to allow us to grow faster and serve more working families. while pursuing our mission to provide future generations with confidence for life.
A company spokesperson declined to specify exactly what regulatory delays had set the company back and in mid-January reiterated that there was no update on the matter.
So what happened?
Mark von Bergen, partner at Holland & Knight, a Portland-based law firm specializing in corporate and securities law, told the Portland Business Journal in December that often IPOs are delayed due to unanswered questions in Securities & Exchange documents.
And the Oregonian Noted that KinderCare has significant debt – $1.4 billion, due by 2025 – and that it disclosed a “material weakness” in its internal control over financial reporting in its offering prospectus earlier in the year. ‘fall.
RELATED STORY: Freeschool
“It’s a business where it’s not easy to make a lot of money,” says Marcy Whitebook, director emeritus of the Center for the Study of Child Care Employment at the University of California, Berkeley. “If you’re relying on what parents can afford and trying to pay people [a living wage], one of the only ways to do that, give your investors what you’re looking for, you have to cut costs. Personnel represent a significant part of the cost. And child care regulations may have come into play.
Other industry watchers suspect the timing of the IPO announcement — in the context of congressional debate over President Joe Biden’s Build Back Better Act, which expand child care rights – was no coincidence. (This week, a White House economist said Biden was always trying to push parts of the bill, and according to some reports, child care expansion is still on the table.)
This potential expansion of public investment is ripe for opportunism, according to some industry observers. In November, the Wall Street Journal reported that the company hoped to raise at least $460 million with the IPO.
In fiscal 2021, the company generated annual revenue of $1.4 billion and serves approximately 200,000 children at its 1,480 locations across the country – but it also lost 128.7 million in 2020 and has closed 20% of its centers since COVID-19. pandemic has started.
Yet it remains one of the largest childcare providers in the country.
“[Child care is] big deal. It may be on the cusp of even greater activity,” says Whitebook.
To subscribe Oregon company, Click here.