Downing Corporate Finance is raising up to £6m for the Nu Nu enterprise investment scheme, formerly Downing Nurseries.
Under the original EIS offer in March 2002, Downing outsourced the management of the nurseries to Nu Nu, an experienced nursery operator. Nu Nu was later acquired by Downing and the EIS was renamed. The money raised under this share offer will be used to fund four new nurseries in 2004 and will help the company achieve its target of at least 15 nurseries by 2007.
The EIS has raised over £5m so far and currently operates six nurseries, which generated a combined income of £1.1m and a gross profit of £400,000 between January and September last year.
The new premises will mainly be freehold, which gives the EIS the security of asset backing. Long leasehold properties will also be considered in the absence of suitable freehold premises.
The success of this EIS depends upon continuing demand for childcare and the ability of the company to find suitable sites at the right price. It will draw heavily on the experience of chief executive Linda Knight, who has managed the opening of over 20 nurseries during the last 13 years,
Knight and her team will visit possible sites and will consider factors such as the level of competition for sites, the location, building costs and the fee levels the nurseries are likely to generate.
The company's strategy is to fund start-up losses with profits from the nurseries they already have, combined with the asset-backed nature of the investment makes this a good investment for people seeking EIS tax breaks. However, the Childcare Corporation operates in the same area and has a longer track record than the Nu Nu EIS.