Childcare provider says it didn’t think abuse scandal news would hurt share price

Childcare provider G8 Education has told the ASX it did not believe that allegations of child sexual abuse occurring in one of its centres would affect its stock price, as it defends its response to the scandal that has seen its shares dive over 25 per cent in a fortnight.

G8’s shares have dropped from $1.20 on the day that police announced multiple charges against Joshua Dale Brown for alleged crimes across a range of privately run centres, to close at 90¢ on Monday.

Pejman Okhovat, CEO of G8 Education, which has defended its communications to investors in the aftermath of abuse allegations.

The sharp decline, which represents a roughly $240 million drop in its market capitalisation, has continued despite G8 last week announcing a raft of actions to respond to growing unease from its largest investors.

The actions included expanding the use of CCTV cameras in all of its more than 400 early childcare centres across the country, and allowing parents to preference who changes their child’s nappies.

On Monday morning, a correspondence between the ASX and G8 was published for investors, revealing the sharemarket operator had sent the embattled provider a series of questions over its conduct and communications to shareholders in the aftermath of Brown’s allegations being made public.

The allegations against Brown were publicised by Victoria police on July 1, but the ASX queried why G8 had waited until a day later, when its share price had dropped to below $1.10, to issue its first announcement to investors about its former employee, who worked at four other centres in addition to the Creative Garden Point Cook business where Brown was charged with abuse.

“G8 responded to the ASX that the information about Brown was already publicly available, having been released by Victorian Police and reported on by various media organisations, before the commencement of trading on ASX on 1 July 2025,” the company’s secretary, Josie King, said.

“[G8] did not release the Information to the market at an earlier time because the Information had already been released to the public and GEM [G8] was not in possession of any material information that was not already publicly available,” King said, insisting the company believed it was complying with ASX rules to provide information that could have a material effect on trading to investors.

G8’s comments suggest it first learnt of the charges against Brown on the same day police made the allegations public. G8 confirmed to this masthead that it first became aware of the charges against Brown involving children shortly after they were made public in the morning of July 1.

King also told the ASX that G8 issued its first statement to investors on July 2, “to acknowledge the shocking and extremely distressing nature of the Information”.

However, the ASX was unconvinced by G8’s assertion, saying it “does not accept that information cannot be material because it is publicly available”, and gave G8 a deadline of before 9am on Monday to provide more information justifying its reasoning, or risk its share put on a trading halt.

On Monday, G8 responded, explaining its initial approach.

“Despite being shocked and distressed by the information, GEM [G8] concluded that it was not likely to have a material impact on GEM’s [G8’s] financial position or performance and in reaching this conclusion GEM [G8] took into consideration that the charges related to conduct by a former employee at one G8 Education centre (with potentially another four impacted) out of a total of 399 centres,” King wrote.

G8 also said that while it anticipated negative publicity following Brown’s charges being made public, it didn’t expect this to affect its share price, noting that after an ABC Four Corners program in March that portrayed the for-profit childcare industry negatively and began months of scrutiny of the sector, “this negative media coverage had not materially impacted GEM’s [G8’s] share price”.

“Ultimately GEM [G8] concluded that the information [about Brown’s charges] was not information that a reasonable person would expect to have a material effect on the price or value of its securities,” King wrote. “[G8] did not have any other information concerning it that was market sensitive.”

G8 also noted it published a statement to its own website, but not the ASX, on July 1, hours after the revelations emerged.

The childcare giant also questioned whether it was the allegations against Brown in one of its centres and revelations it had employed him for years across multiple branches, and not the “uncertainty over potential changes to the regulatory landscape and negative public sentiment towards the childcare sector generally” that had contributed to its wounded trading price.

Companies that the ASX deems to have violated its rules can have trading in their shares suspended, as well as regulatory action and potential action from aggrieved shareholders.

Since revelations emerged, a series of G8’s major investors, including Wilson Asset Management, HESTA, Australian Retirement Trust and Tanarra Capital have expressed concern to the company, such as requests for specific actions to bolster its child safety standards and employee checks. Meanwhile, shareholder advisers have also raised the prospect of clawing back some of chief executive Pejman Okhovat’s pay.

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