Investing in Childcare: Where Quality Truly Matters

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5 Aug 2025

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Episode 3 of the Investment Matters Podcast features Mike Cameron, Commercial Director at Jarra.

With over 30 centres developed and a hybrid model combining real estate and business investment, Jarra, via the Jarra Childcare Trust, offers investors a unique investment opportunity in Australia's childcare sector. The sector itself benefits from consistent government support, essential service status, and resilient demand.

Mike also highlights Jarra’s strategic site selection, focus on operational excellence, and stakeholder alignment as key drivers of success. Investors should watch to understand how quality-focused, socially impactful investments can deliver in a fragmented but vital industry sector.

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Darren Connolly - CEO at InvestmentMarkets
Darren Connolly00:07 Play

Hello and welcome to the Investment Markets podcast, where we aim to discuss investment matters that impact self-directed investors. I'm your host, Darren Connolly, CEO at Investment Markets. And with me today is Mike Cameron, Commercial Director at Jarra, a commercial real estate developer and fund manager who have delivered more than 30 childcare centers nationally. Mike has a background in corporate finance, banking, property, investment, and family offices. And today we are going to discuss investment matters relating to the opportunities that come with Jarra's hybrid strategy to roll out a national portfolio of childcare centers. However, before we get into it, I need to remind you that this is general advice and general information only, and nothing in this podcast should be construed as an investment recommendation. You will need to decide what is right for you. Welcome, Mike.

Mike Cameron - Commercial Director
Mike Cameron01:08 Play

Thank you, Darren. It's great to be here.

Darren Connolly - CEO at InvestmentMarkets
Darren Connolly01:10 Play

Mike, before we delve into the childcare sector, can you outline your investment journey and how you got here and why?

Mike Cameron - Commercial Director
Mike Cameron01:19 Play

Sure. I've always been intrigued by the technical relationship of macroeconomics, interest rates, FX, and also how that then plays into the micro drivers as well. Economics was my favourite subject at school and then that flowed on to university. I did my honours in finance at university and then started as a corporate finance analyst for my first job, moved into merchant banking and then worked for one of Australia's largest family offices, investing on their behalf. So it's something I've, through my career, really enjoyed on both sides of the fence, whether that be on the buy side or the sell side, and is now carried through to Jarra.

Darren Connolly - CEO at InvestmentMarkets
Darren Connolly01:59 Play

Mike, what makes the childcare sector such a compelling opportunity for long-term investment?

Mike Cameron - Commercial Director
Mike Cameron02:06 Play

At its core, it's demand. We all have children. We all need to work. It's an essential service for maternal labour force participation, but also just for family dynamics. I've got three young children. They've all gone to childcare and it's an important part of their development. So it's now well and truly ingrained into Australian society: children attending childcare, which then goes to the risk characteristics of the underlying investment. Strong demand, strong government support, which has been the case for over three decades now. Strong bipartisan support. Bipartisan support, yes.

Darren Connolly - CEO at InvestmentMarkets
Darren Connolly02:44 Play

It doesn't happen very often.

Mike Cameron - Commercial Director
Mike Cameron02:46 Play

No, it's quite unique in that sense. In fact, I'm not aware of another sector that has had that level of support by both sides of government for such a long period of time. So that then makes the class very resilient and a very defensive asset class for investors to have in their portfolio.

Darren Connolly - CEO at InvestmentMarkets
Darren Connolly03:04 Play

Mike, how does Jarra's hybrid model of real estate and business investment enhance returns and reduce risk? Why is it advantageous for investors?

Mike Cameron - Commercial Director
Mike Cameron03:14 Play

First of all, I'll start with our experience in this sector and what we have seen both on the property side and the operations side. We've developed over 30 childcare centres now for a range of tenants ranging from ASX listed businesses to as small local operators and not for profit organisations. In 2020, we also founded an operating business called Bloom Early Education, which now has 10 operating centres in Perth, Western Australia, with a further five in various stages of development. So we have quite a lot of experience in both real estate investment, but also investing in operating businesses. Now, what we've found is they're very interlinked and the key to success of both of those investments is first of all, site selection. So we've seen a lot of other developers and tenants invest in assets that are based on land price for development from the operator or from the tenants perspective, just a lack of understanding of what the key demand drivers are. So convenience for parents. passing traffic, these sort of things. So by being across both sides of the investment, we've got control of the investment from day one. So we set the business up to succeed by making sure that we've got good site selection that supports the underlying business. That's positive for both the property investment, but also puts the business on a good footing to then create positive cash flow. Yeah. Secondly, we're involved in the day-to-day management of the business. So we have operational oversight to ensure that we're creating very positive learning environments for children and inviting centres for parents. But also, at the end of the day, we're looking after children. I've got three small children and it's a dynamic business. So it ensures that when operational issues do arise, we can deal with them proactively. The management oversight is important also. also. And thirdly, by investing across both the real estate and the operating business, it allows us to create alignment between the tenant, the landlord and the financier. And that sort of wraps the previous two items in a bow. We can acquire land based on location. We can develop centres to respect that's conducive to quality learning environments and becoming an employer of choice. So alignment between us as a fund, our investors and the tenant is also a very important point of that formula as well.

Darren Connolly - CEO at InvestmentMarkets
Darren Connolly05:53 Play

Mike, childcare is often seen as being essential infrastructure, and it's certainly been in the news lately. Can you summarize what that means for the sector and really what it means for Jarra as well?

Mike Cameron - Commercial Director
Mike Cameron06:09 Play

Let me start by saying what I've read in the newspaper over the past month has been nothing short of harrowing and unacceptable. Our strategy for Jarra Childcare Trust is to create a business which provides best in class care and we're very serious and genuine about that. So I fully support more regulation into the sector and improving the quality of care across the board. So any investment thesis into childcare really has to prioritise first and foremost quality of care and operational quality and as well as that providing high quality learning environments for children. So what I've read in the news in terms of the proposed changes, I'm very supportive of. Prior to that, news about the childcare industry had been nothing but positive. We had decades of unwavering government support. The Albanese government have made it their pledge to improve childcare, which it looks like they're doing. They've invested quite significantly into the three-day guarantee, which broadens the number of children who have access to childcare.

Darren Connolly - CEO at InvestmentMarkets
Darren Connolly07:16 Play

And are probably going to continue to invest into the sector. Is that fair?

Mike Cameron - Commercial Director
Mike Cameron07:19 Play

The childcare's here to stay. We all need to work to provide for our families. It's critical for labour force participation at an economic level. I know it's often positioned as a social service, but it has an economic multiplier effect. It increases the number of taxpayers, broadens the tax base. and contributes to GDP. So it does have a positive contribution to GDP as well. But childcare is here to stay and the fundamentals of childcare are strong. In the short term, I do believe that there is some changes required to improve the quality of care and we're committed to do that in any event. So We have a very strong operations team with significant experience managing centres across Australia. I feel like of all the operators that we deal with, we're very well placed to deal with any changes that may eventuate.

Darren Connolly - CEO at InvestmentMarkets
Darren Connolly08:16 Play

Mike, how does Jarra ensure and maintain asset quality and the right standards across what is a large and growing portfolio of centres?

Mike Cameron - Commercial Director
Mike Cameron08:28 Play

Let me start by classifying the childcare sector nationally. It's a very fragmented industry. There's over 9,000 centres in Australia now. 9,000. Yeah. Wow. And the top five are less than 20%. I think they're 17% of total supply. Predominantly, the sector is made up of very small operators. So 35% of the sector are single operator businesses, so predominantly family-run businesses. So there's a huge amount of opportunity in the sector. I don't see any challenges with deal flow. It's about finding high quality investment opportunities. So how our team is well positioned to deal with that, first of all, we've developed over 30 childcare centres now with a range of different tenants. We've seen what works and we've seen what doesn't. Typically, more often than not, a poor performing business starts with poor site selection. So we have a due diligence process which runs through demographics, how many children in the area, how many children are attending childcare. So we do a bottom up supply and demand bill for each centre because it's such a localised demand catchment. So it starts with site selection. Secondly, we ve teamed up with Early Learning Management, who are our operations partner for Jarra Childcare Trust. They ve operated more than 450 centres across Australia in the past 35 years. We ve dealt with a lot of different operators and they re best of class. They ve done two IPOs, a number of large trade sales. They ve been through cycles and understand how to run childcare businesses intimately. They currently operate 95 centres across Australia with an average occupancy of 86% compared to the market currently is about 73%. So we're very comfortable with the management capability as well. And thirdly, it's the end-to-end approach of controlling site selection, having a high quality management team, but also alignment between all the stakeholders along the way. So investors are investing in the business. Our operations partner, Early Learning Management, are shareholders in the business. And Jarra, the manager, is an investor in the business as well. So we have good alignment between all the stakeholders. Everybody's got an interest in making sure it works well. Yeah. Above, I mentioned before that a successful investment thesis into childcare first and foremost has to focus on quality. This is a self-governing way of making sure that we do that.

Darren Connolly - CEO at InvestmentMarkets
Darren Connolly11:11 Play

Mike, can you give us a couple of examples of where the Jarra model has really made a difference and just tease it out a little bit for us?

Mike Cameron - Commercial Director
Mike Cameron11:20 Play

I mentioned the three real drivers of business or investment value being site selection, management capability and then alignment between the stakeholders. So we'll start with a situation where I've seen this not work. We acquired an operating business from a national childcare operator in 2022. The location of the centre was actually really favourable But the operator and the landlord, there was an alignment there, the centre was old, it was rundown, it wasn't performing well, poor community engagement, poor staff culture. So neither the operator or the tenant had the incentive or the alignment to really invest into the centre. We came in, we invested meaningfully into the centre, we brought in a strong leadership team and we re-engaged with the local community. Fast forward to today, that business is no longer performing very well, whereas previously performing quite poorly financially. And it's a positive, it has a very positive impact on that local community as well. And how do you engage with the community? What does that look like? we're caring for children. At the end of the day, we're caring for children. And I don't think it can be overlooked. The parents entrust their childcare provider every day with something incredibly important. In fact, it's the most important thing in their life and that's the wellbeing of their child. it's a deeply, it's a deeply personal decision. And when parents drop their kids off to their childcare provider, they want to trust that that's being respected for obvious reasons. So it's about the relationship that children have with their carer. It's about the relationship that the business has with the community. So that's with mum and dads when they walk in the door that they feel comfortable with that business. And it's about how we are positioned within that community to provide that service. Mike, can you tell us a little bit more about the immediate investment opportunity? I'm very excited to announce that the fund is now open for investment. We've met the minimum equity raise requirements. We have our first acquisition this week being a centre in Western Australia. The fund has a five-year term and the allocation strategy is 50% property, 50% businesses. The target return for the fund is a 15% IRR to investors pre-tax and post fees. The longer term strategy for the fund is a IPO or large trade sale of the businesses and the property will either be part of that process or be sold separately. And the fund has a five-year investment term.

Darren Connolly - CEO at InvestmentMarkets
Darren Connolly14:11 Play

And it's for wholesale investors only.

Mike Cameron - Commercial Director
Mike Cameron14:14 Play

It's for wholesale investors, yeah.

Darren Connolly - CEO at InvestmentMarkets
Darren Connolly14:16 Play

Now, Mike, we all know every investment carries risks. Can you just outline some of those risks for us and how you are managing those risks to protect investors?

Mike Cameron - Commercial Director
Mike Cameron14:27 Play

This is something that we as a team have put a lot of thought into. First of all, I mentioned that the fund is very much structured around creating alignment between all the stakeholders. What we have done is increased quite significantly the amount of independence and governance we have in this fund. We have an independent director on the board of the childcare business. We have an independent investment committee member now. So we've really stepped up that governance. But Jarra Childcare Trust really is the evolution of Jarra as a business. We've developed a lot of childcare property. We've invested in a lot of operating businesses. So investors are really investing into that experience. But also early learning management are a huge asset for that de-risking process. They've got a significant amount of operations experience. They have a proprietary investment operations platform, which handles everything from compliance, weekly updates on wage to revenue data, traffic light systems for daily occupancy. So at an operational level, we're very comfortable with the amount of oversight that we have also.

Darren Connolly - CEO at InvestmentMarkets
Darren Connolly15:35 Play

And they've got quite a few centres they've looked after.

Mike Cameron - Commercial Director
Mike Cameron15:39 Play

Is that correct? ELM over the 35 years that they've been operating have managed over 450 centres and they currently manage 95 centres across Australia with a very impressive average occupancy. So yeah, they've got significant experience in that space.

Darren Connolly - CEO at InvestmentMarkets
Darren Connolly15:56 Play

Mike, tell us a little bit about the return composition of the funds. What can investors expect? Can you give us a little bit of a breakdown?

Mike Cameron - Commercial Director
Mike Cameron16:04 Play

Jarra Childcare Trust has two verticals. It invests in childcare real estate and operating childcare businesses. The childcare real estate investments provide strong lease income for the fund, and that's underwritten by long-term leases. 15 to 20 year leases are typical in this sector. There's also the potential for capital gain. The fund does have exposure to some development assets. All of these things together provide very strong asset backing for investors. In terms of operating business investments, these are all premised on quality of care and quality of learning environments. My wife's a paediatric OT, so she's had quite a lot of input into this. early learning management. They've operated more than 450 centers over the past 35 years, so they have a lot of input into design. Lots of best practice. Lots of best practice. Ourselves, we've had experience working with a range of operators, so taking a lot of lessons from those developments as well. All of our centres are architecturally designed. They have a strong focus on outdoor play. We spend a significant amount of the construction budget on outdoor play, but also best practice in terms of visibility through rooms and efficiency for care providers as well.

Darren Connolly - CEO at InvestmentMarkets
Darren Connolly17:24 Play

What are you most excited about over the next couple of years for the Jarra Childcare Trust?

Mike Cameron - Commercial Director
Mike Cameron17:30 Play

There's been a lot of hard work that's gone into getting us to here. And so I'm initially very excited about the fund opening this week and our first investment in the fund. I've been very excited about the feedback that we've had from investors. This is, as far as I'm aware, a unique structure in an Australian context. I'm very excited about working with our team and ELM. We're all moving towards the same goal of creating a network of childcare centres across Australia that prioritise quality of care and providing environments that are conducive to positive outcomes for our next generation. And then when I look further into the future, the idea of having a network of 50 or 100 childcare centres that we then list on the ASX and having investors come along for that ride and doing that together is something I'm equally as excited about.

Darren Connolly - CEO at InvestmentMarkets
Darren Connolly18:25 Play

Finally, turning back to you, Mike, what's the most valuable lesson that you've learned in your investment career so far?

Mike Cameron - Commercial Director
Mike Cameron18:33 Play

I've been very fortunate in my career to invest across multiple sectors and asset classes, childcare, property, mining, energy, and then the number one lesson through investing in all those sectors is investing quality. And it's particularly applicable here with childcare. Quality assets will perform irrespective of market conditions. And the same can't be said for investing in lesser quality assets. So always invest in quality. That's the rule? Quality over quantity, which really is the genesis of Jarra Childcare Trust. creating alignment between our business as manager, our operations team and investors. It's not about scale. It's about building a quality network of childcare centres across Australia to support our next generation.

Darren Connolly - CEO at InvestmentMarkets
Darren Connolly19:29 Play

Quality outcomes for the next generation. Yes. Excellent. Thanks very much for your time and insights today, Mike. Thank you for having me. Thank you to everyone for listening. For more insights like this, and to search, find, and compare hundreds of investment products all in the one place for free, including Jarra's Childcare Trust, go to investmentmarkets.com.au.

Meet the speakers

Darren Connolly - CEO at InvestmentMarkets
Darren Connolly
CEO at InvestmentMarkets

Darren has substantive executive marketing experience driving strategy, planning, and successful customer outcomes across local and international investment markets. He has operated across wealth, investment, funds management, banking, broking, and payments segments.

Mike Cameron - Commercial Director
Mike Cameron
Commercial Director

Mike has extensive experience in corporate finance, investment management, and portfolio strategy, having held key roles across merchant banks, property firms, and family offices. He began his career at BDO Perth, later managing diverse investments at Sirona Capital and overseeing strategic matters at AMB Holdings. His track record includes leading capital raises and advising on strategies ranging from family businesses to multigenerational billion-dollar assets. Currently Commercial Director at Jarra, Mike holds a First Class Honours degree in Commerce from Curtin University.

Related Investments

Jarra Childcare Trust
Jarra

A unique opportunity to invest in a diversified national portfolio of high-quality childcare real estate and operating businesses

Wholesale Investor
Objective
Growth and Income
Category
Property
Min. Investment
$250,000
Liquidity
Illiquid
Industry
Infrastructure
Availability
Open for investment
Funding Stage
Unlisted Early-Stage Fund
Structure
Managed Fund
View

Disclaimer

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