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Private equity ties to fostering and children’s homes in England probed

A thinktank says “big four” independent fostering agencies paid more than £200m to shareholders in interest payments since 2020.

Reported · Written up by our desk · Industry & Deals

Private equity firms and other institutional investors are linked to a large share of England’s biggest children’s care providers, a new investigation by the thinktank Common Wealth finds, as calls grow to end profit-making in the sector.

The analysis says private equity companies now own or partly own 11 of the 20 largest providers of fostering and children’s homes, and that the “big four” independent fostering agencies that provide almost a quarter of fostering placements have paid out more than £200m from taxpayers to shareholders in interest payments since 2020.

Common Wealth also found that at least one in three fostering agency placements and one in five children’s homes placements are run by firms backed by institutional finance, including private equity, hedge funds, venture capital and sovereign wealth funds.

The report says the four largest fostering companies used shareholder loans, where shareholders lend to the business at interest rates typically higher than bank rates, and through this method companies have paid or reserved at least £205m to shareholders and investors since 2020. It highlights National Fostering Group, which has more than 4,000 places and is owned by Stirling Square Capital Partners, as having paid more than £116m in interest on investor loans since 2020, plus £71m in interest on preference shares.

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