Teather & Greenwood Investment Management has introduced Childcare Corporation 6, an enterprise investment scheme that aims to raise up to £10 for the building and operation of around 10 purpose-built children's nurseries in the Midlands and the south of England.
This EIS builds takes up the objectives of the previous five Childcare Corporation schemes by providing private day-care facilities for children aged between three months and five years. Each nursery is expected to have places for 100 children.
The first three Childcare Corporation schemes are fully invested and the money raised by the other two existing schemes is already committed. The directors of the EIS realise that property prices are rising and estimate the cost of each site at between £275,000 and £350,000, with London sites anticipated to exceed this range. However, they believe their experience is securing sites for the previous EISs will help then negotiate reasonable prices.
The company believes childcare is a growing market, with demand for nursery places from working parents exceeding supply, since parents may be more comfortable relying on an organisation for childcare rather than a full-time nanny.. The advantage for investors is that they may profit from the nurseries as businesses and also from the value of the property if prices increase. In addition, investors will receive the tax breaks associated with an EIS.
However, as an unquoted company that is developing new businesses, the risks for investors could be high. The success of the EIS will depend on a range of factors such as the availability of development sites at the right price, the carrying out of building work on time so extra costs are not incurred, and the continuing demand for childcare provision.