Private equity sharks cash in on foster care

Three private equity firms running foster agencies have together made a £40m profit from the plight of vulnerable children, The Mail on Sunday can reveal.

They have raised millions in the midst of a crisis in the sector. While the procurement tycoons profit, many foster carers drop out of school, claiming that the sums they receive for caring for children are insufficient.

The number of foster carers has fallen to its lowest level in a decade, and 6,500 foster families are desperately needed in England, according to Ofsted, which regulates education and care.

The situation is so grim that some children face spending Christmas separated from their siblings or being placed with foster carers miles from their communities.

But private equity firms are making millions of pounds in profits running fostering agencies.

These began as small-scale local operations, but in recent years the agencies have been absorbed by private equity firms and turned the sensitive area of ​​foster child care into big business. The three main agencies (National Fostering Group, Polaris and Compass Community) are owned by private equity.

They make money by charging local councils to place children in foster homes. Industry sources say their rates are double or triple what they would be if councils did their own placements.

The State contracts with for-profit agencies to recruit and train foster caregivers. Those who pass an assessment, home visit and final checks from a foster panel are then matched with a child based on the caregiver’s preferences, experience and training.

It is a large and growing business, with 44 per cent of all foster carers hired through independent agencies, according to Ofsted data. This figure was 41 percent in 2020. One of the private equity moguls is the flamboyant Italian financier Stefano Bonfiglio, whose firm Stirling Square Capital owns National Fostering Group, which places children in foster care.

Bonfiglio co-founded Stirling Square in 2002 and is the ex-boyfriend of makeover guru Trinny Woodall.

The racehorse-loving billionaire married former Goldman Sachs banker Carolina González-Bunster in 2014. Former President Bill Clinton is a friend.

National Fostering Group made a profit of £23.4m in the year to August 2023.

Former City banker Seamus FitzPatrick is another private equity player in the sector. The company he runs, CapVest, owns Polaris Community, which is another major development agency. It made a profit of £14.1 million in 2023, up from £13.3 million the previous year.

Britain’s third largest private fostering agency is also in the hands of private equity. Compass Community offers foster care as well as other services such as children’s homes and education for young people with additional needs.

In May of this year, the company was sold to Cap10 Partners, a firm founded by private equity veteran Fabrice Nottin. The Frenchman previously worked for nine years at the US asset management company Apollo Global and was on the board of directors of Watches Of Switzerland.

Compass Community made a profit of £3m in the year to March 2023 on revenues of more than £108m.

The wealthy lifestyles of private equity tycoons are a world away from those of foster carers, who receive the equivalent of £7.50 an hour, less than the minimum wage, plus a basic allowance to pay clothing and food for each child. .

Most are self-employed and therefore have no employment rights, including a minimum wage, sick pay, paid leave or pensions. Many depend on benefits.

One of them told this newspaper that foster carers “basically work without any rights or protections whatsoever” despite the fact that private equity companies make “huge amounts of profits” behind them.

Fostering Network, a UK charity, said last month that the number of foster carers in England fell to a ten-year low of 42,615 in the year to March from 45,370 in 2021.

“The fewer foster carers we have, the more children will end up in residential care or homes away from their families and friends,” said the charity’s chief executive, Sarah Thomas.

Around 57,000 children in England are in foster care.

Chancellor Rachel Reeves unveiled £44 million for foster care in her budget to increase the number of foster parents.

A spokesperson for Stirling Square Capital said: ‘We are a long-term investor in healthcare and social care and have owned NFG for nine years.

“During this time, Stirling Square has never withdrawn a dividend from the business or reinvested all available profits into NFG, which has paid (and always will pay) UK tax.”