Teather & Greenwood has introduced Childcare Corporation 7, an enterprise investment scheme that aims to raise money for the building and operation of three or four more purpose-built children's nurseries around the UK.
This EIS takes up the objectives of the previous six 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 directors of the EIS have built up a track record through the previous Childcare Corporations EISs and a seventh was established for investors who want to take advantage of this and the additional security that asset backing provides.
The directors believe their success is securing sites for the previous EISs will help them negotiate reasonable prices and they are already looking at possible sites for further investment.
The company believes childcare is still 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 from the value of the property if prices increase. In addition, investors will receive the tax breaks associated with an EIS, including inheritance tax breaks.
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, being able to carry out building work on time so extra costs are not incurred and the continuing demand for childcare provision. But the track record of this EIS may put it in pole position with investors who are looking for this type of investment.