H.R. 9875: Protecting Childcare from Private Equity Act

This bill would require the Securities and Exchange Commission (SEC), working with the Department of Health and Human Services, to collect information from certain large private funds about their ownership, purchase, and sale of childcare businesses.

What counts as a covered private fund

The bill applies to private funds that:

• would otherwise be treated as investment companies under federal law, but are exempt under certain provisions;
• have more than $150 million in assets under management; and
• through entities they control, provide childcare at more than 25 locations.

Information reporting to the SEC

Within one year after the bill becomes law, the SEC would have to require these covered private funds to submit information about their ownership, purchase, and sale of childcare-providing legal entities. The SEC would then have to send Congress a yearly report with the data, but in anonymized form.

Limits on newly acquired childcare businesses

For four years after a covered private fund first gains control of a childcare provider, the bill would bar certain financial actions:

• The fund could not sell any interest in that childcare business.
• The childcare business could not pay dividends or capital distributions to the fund.
• The childcare business could not buy back shares from the fund.

Study of private equity ownership

The bill would also direct the Comptroller General of the United States to study how private equity ownership affects childcare providers. The study would look at issues such as:

• quality of care;
• availability of childcare spots;
• tuition; and
• employee wages.

The Comptroller General would have to submit a report to Congress within two years.

Relevant Companies

None found