Christophe Durieux and Odile Broglin, founders of People & Baby, a network of daycare centers located in Paris, found themselves at the center of a major event in 2017 that highlighted the exposure of private French daycare groups to the risks of global capitalism. This occurred as their economic model was under investigation by the French National Assembly. On April 22, Christophe Durieux, the president of People & Baby, was removed from the company by their main creditor, the investment fund Alcentra, now a subsidiary of the American fund Franklin Templeton. The couple had been the sole shareholders of the company until April 18.
In order to expand internationally, People & Baby sought funding from the British investment fund Alcentra in 2018, which provided them with a line of credit totaling nearly 500 million euros, in addition to interest. The company, with a revenue of 68.9 million euros in 2017, experienced rapid growth through acquisitions, allowing it to establish a presence in countries such as Canada, the United States, Luxembourg, Italy, Belgium, China, Singapore, Qatar, and the United Arab Emirates. Despite facing challenges during the Covid-19 crisis, where they had to pay 4 million euros in interest while their facilities were closed worldwide, the real turning point came when Alcentra was acquired by Franklin Templeton in 2022.
Following this acquisition, Franklin Templeton refused to release the final tranche of 12.9 million euros, claiming that People & Baby had exceeded their debt ratio by 0.1%. The founders, facing a cash flow crisis that led to financial losses in late 2023, reluctantly agreed to a deal where Alcentra-Franklin Templeton could acquire 75% of voting rights if deemed necessary. This decision was made in exchange for 2.5 million euros to pay salaries for the 6,000 employees in France and 10,000 worldwide. Despite these challenges, the company continues to operate, but with a significant shift in ownership and control due to the actions taken by their principal creditor.
The case of People & Baby exemplifies the precarious position that private French daycare groups find themselves in within the context of globalized capitalism. The reliance on external funding and investment can lead to significant risks and loss of control over the company’s operations. The founders’ dreams of expanding internationally and achieving success on a global scale have come at a cost, as they now face challenges in managing their debt and ensuring the sustainability of their business model.
The situation faced by People & Baby also raises questions about the responsibility of investment funds and financial institutions in supporting the growth of companies and ensuring their long-term viability. The actions taken by Alcentra-Franklin Templeton in enforcing strict financial terms and seizing control of the company’s operations have had profound consequences for the founders and employees of People & Baby. It highlights the power dynamics at play in the world of finance and the impact it can have on businesses, especially in the context of a globalized economy.
As the daycare industry continues to evolve and face challenges related to economic crises and shifts in consumer behavior, the case of People & Baby serves as a cautionary tale for other private daycare groups in France and beyond. The need to balance growth and financial stability with the long-term well-being of the company and its employees is paramount, especially in a competitive and rapidly changing market environment. The events surrounding People & Baby’s struggle for financial survival underscore the complex interplay between business, finance, and ethics in the modern era.
