Debts could shift under Virgin bidder Bain

Children at the Only About Children daycare in St Leonards in Sydney. Picture: Tim Hunter.

Major secondary debt investors such as Oaktree Capital Management, The Carlyle Group and Apollo Global Management are believed to be circling distressed loans in two Australian-based companies owned by Bain Capital.

Cerberus Capital Management, Varde Partners and Fortress are also potentially exploring an acquisition of the debt.

It is understood that offshore lenders to Bain’s Australian childcare provider Camp Australia are considering a move to offload debt, while there is also thought to be some upcoming movement within the lending syndicate of Bain’s other childcare provider, Only About Children.

Any trading of distressed loans in its Australian investments is unlikely to be welcomed by Bain right now, as it closes in on Virgin Australia and no doubt remains keen to keep challenges relating to other Australian investments out of the public eye while the competition for the carrier unfolds.

Bain Capital purchased Only About Children in 2016.

It bought Camp Australia, which provides before and after school care at numerous locations, in the same year for between $400m and $500m.

Bain has since bolstered Only About Children, which operates at more than 70 locations, with the acquisition of Little Learning in 2018.

The price paid for Only About Children was never disclosed, but it was understood to have debt worth about $218m, according to accounts for the 2019 financial year.

Debt was refinanced in 2018 through Goldman Sachs.

It is understood that the banking syndicate is made up of foreign lenders and it is thought that Camp Australia has a similar amount of debt.

Bain Capital, based in Boston, has about $105bn of assets under management.

With an office in Australia, it has invested here in healthcare, childcare and retail.

It purchased a major stake in Boost Juice owner Retail Zoo in 2014 in a deal worth $185m and tried to sell or float the business last year.

However, the buyout fund retained the company when investors did not meet the price expectations of the private equity firm.

It also purchased the West Australian aged care provider Craig Care for a price that valued the company at up to $300m.

Bain also bought a stake in Webjet after it carried out due diligence on the company and entered talks about embarking on a recapitalisation deal, as first reported by DataRoom in March.

Bain also earlier owned and floated the accounting software business MYOB before it was taken over by rival buyout fund Kohlberg Kravis Roberts.

Sources close to Bain Capital say the private equity firm is honouring all its debt commitments on its Australian investments.