It’s been quite the journey for one of Canada’s top five pension funds to become what is understood to be the country’s largest childcare provider.

And that journey, which culminated recently with a $145 million acquisition of a Canadian-based public company by a U.K.-based entity in which Ontario Teachers’ Pension Plan is the largest shareholder, has been circular. In short, prior to making its first Canadian acquisition in the childcare sector, Ontario Teachers’ made a hefty investment across the ocean.

The recent purchase — in which Busy Bees acquired the TSX-Venture listed BrightPath Early Learning for $0.80 a share — also capped a successful period for unitholders of Vision Capital, a major shareholder of BrightPath since 2010.

Vision’s chief executive Jeffrey Olin was chairman and director of BrightPath, which started life in the summer of 2007 as a capital pool company (San Anton Capital) and emerged as a public entity in early 2010 following a $16.5 million qualifying transaction with the privately held real estate company Edleun Inc.

For Vision, a firm formed in 2008 that buys and sells real estate securities based on a comparison between the stock market valuation and the property market valuation and which engages in activism to surface value, the sale represents the 14th time that is has exited one of its investments through an acquisition.

At $0.80 a share the sale — which represented almost a 50 per cent premium to its recent trading price — wasn’t done at the top of the market. Indeed the stock’s high price occurred about seven years back, shortly after BrightPath became public. For the past three years, the stock has traded in the $0.25- $0.60 range.

So why didn’t Teachers’ make a move one year back and buy Bright Path for a lower price? In reality the company wasn’t for sale then. As well, Olin and other shareholders had the power to block such an acquisition and that group had a clear view of what represented proper value.

“It’s a fair price,” said Olin in an interview, adding that negotiations started earlier this year with Ontario Teachers’ and Busy Bees. “We presented them our valuation and the basis on which we got there. They then did their own due diligence and received help from lots of advisers.” In late May the parties signed a definitive arrangement agreement; a shareholders meeting was called for mid-July and BrightPath’s shares were delisted last Friday.

The tale of Ontario Teachers’ making its first Canadian acquisition in the child care sector starts in October 2013 when the fund, which manages almost $180 billion of assets, acquired Busy Bees Nursery Group, the U.K.’s largest childcare provider. (At the time, Busy Bees operated 213 nurseries, employed 7,000 people and provided care for 20,000 children. Teachers’ said Busy Bees has “an outstanding business with good growth potential.”)

Indeed it has been something of a growth machine. It now cares for more than 40,000 children in 335 nurseries in the U.K. It also operates 70 nurseries across Singapore and Malaysia.

For its part, BrightPath has also been on an acquisition spree: a start-up in early 2010, it now provides almost 9,000 places in B.C, Alberta and Ontario, and employs 2,100 people in 78 locations.

So what are the plans? Given that Ontario Teachers’ capital has allowed Busy Bees to expand both in the U.K. and into Asia, it’s a fair bet the recent entry into Canada will be the start of an acquisition strategy. “They told me that they wanted a platform,” said Olin.

Teachers’ didn’t provide a comment.

Financial Post

bcritchley@postmedia.com