Leapfrog hopes to raise 30m through the flotation, with the company valued at an estimated 70m. The cash is intended to fund Leapfrog's continuing expansion and wipe out its trading losses.
The group was established in 1998 by former pub chain boss Derek Mapp and early years consultant and nursery group director Sue Husbands. It operates 34 nurseries with a further ten due to open over the next year. It plans to open 15 a year thereafter. Most of its nurseries are freehold, adding to the group's value.
Derek Mapp, executive chairman, has brought substantial strategic and financial experience to the group and has steered a company through the process of flotation before. He founded the Tom Cobleigh pub chain, which floated in 1995, and was bought by Rank Leisure in 1996. Sue Husbands, managing director, previously ran a consultancy assisting new nursery operators and ran her own group of six nurseries.
Mr Mapp said, 'We believe we have built Leapfrog into a great business, with a strong brand, offering excellent facilities and the highest levels of childcare to parents. It also offers many attractions for investors - in particular, high-growth potential with strong asset backing and a predictable business model in the education sector.
'We have an excellent opportunity to capitalise on the position we have established in the childcare market. Flotation will help us to fund the continued expansion of our nursery chain as we move further towards our objective of creating the UK's largest and best private nursery group.'
According to the recent Laing and Buisson healthcare consultancy report on the private nursery sector, Leapfrog made losses of 3,112,000 - equivalent to just over 40 per cent of its 7,545,000 revenue - in the financial year ending April 2001. However, Mr Mapp told Nursery World that being loss-making would not affect Leapfrog's chances of success. 'Those who understand the business model of nurseries understand that it takes a period of time to achieve profitability. Investors who are interested in Leapfrog would be investing in the future value of the company.' The group plans to give a number of staff in management positions share options.
Francis King, a director in Andersen corporate finance, said it was important for the sector as a whole that the flotation should be successful, as it would 'set a pricing benchmark for all the others'. The move would also put Leapfrog, alongside Nord Anglia and BUPA, the owner of Teddies, in a strong position to acquire other groups.
Annie Liebster, assistant director of corporate finance house Livingstone Guarantee, said, 'This is a sign that the market is maturing. Given the recent state of the markets, it's quite a bold move to float now.'
Martin Pace, who has formerly worked for Jigsaw and Kidsunlimited and has now set up his own nursery group, Dolphin Nurseries, also said he felt that Leapfrog had made a bold move, particularly given the costs associated with flotation. 'My concern would be, alongside such rapid growth, how do you ensure you deliver really high standards of childcare?' he said.
