ABC Learning was Australia's largest childcare company — then the debt came due

ABC Learning Centres was founded in 1988 in Brisbane by Eddy Groves, starting as a single childcare centre. Groves expanded rapidly through debt-funded acquisitions, reaching 43 centres by 2001, 230 by 2003, and 697 across Australia and New Zealand by 2005. The company went public and its market capitalisation peaked at A$4.1 billion. Critics warned that profits came from low staff wages, cost-cutting, and reliance on government childcare subsidies rather than operational excellence.

In 2005, ABC Learning expanded into the United States by acquiring Learning Care Group (467 centres) and La Petite Academy for US$330 million, then into the UK. The company took on A$1.8 billion in total debt to fund this growth. In H2 2007, profits unexpectedly dropped 42% to A$37.1 million. Directors were forced to sell shares after margin calls, and the share price collapsed from its peak of A$8.62 to 54 cents. Auditors refused to sign off on financial reports, citing a need to recast previous years' profits.

In March 2008, ABC Learning sold 60% of its US business to Morgan Stanley for US$700 million to pay down debt, but it was not enough. On November 6, 2008, the company entered administrative receivership. The Australian government injected A$22 million to keep centres open. The company was eventually wound up in 2010, and its remaining centres were acquired by Goodstart Early Learning, a charitable consortium. Eddy Groves was later banned from managing corporations for five years.