Three private equity firms running foster care agencies have made a combined £40 million in profit out of the plight of vulnerable children, The Mail on Sunday can reveal.
They have raked in their millions amid a crisis in the sector. While the buyout barons are cashing in, many foster carers are dropping out, saying that the sums they receive for looking after children are inadequate.
The number of foster carers has shrunk to its lowest in a decade, and 6,500 fostering 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 split up from their siblings or being placed with foster carers who are miles from their communities.
But private equity firms are making millions of pounds in profit by running fostering agencies.
These started as local, small-scale operations, but in recent years agencies have been gobbled up by private equity firms and have turned the sensitive area of children’s foster care into big business. The top three agencies – National Fostering Group, Polaris and Compass Community – are all private equity-owned.
Luxury: Stefano Bonfiglio with ex-girlfriend Trinny Woodall at the Epsom Derby
They make money by charging local councils for placing children in foster homes. Industry sources say their fees are double or triple what they would be if councils made their own placements.
Profit-making agencies are contracted by the state to recruit and train foster carers. Those who pass an assessment, home visit and final checks from a fostering panel are then matched with a child based on the carer’s preferences, experience and training.
It is a big and growing business, with 44 per cent of all foster carers sourced through independent agencies, according to Ofsted data. This was up from 41 per cent in 2020. One of the private equity barons is 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 an ex-boyfriend of makeover guru Trinny Woodall.
The racehorse-loving multi-millionaire went on to marry ex-Goldman Sachs banker Carolina Gonzalez-Bunster in 2014. Former President Bill Clinton is a friend.
National Fostering Group made a profit of £23.4 million for the year to August 2023.
Former City banker Seamus FitzPatrick is another private equity player in the sector. The firm he runs, CapVest, owns Polaris Community, which is another major fostering agency. It made a £14.1 million profit in 2023, up from £13.3 million the previous year.
Britain’s third-largest private foster agency is also in private equity hands. Compass Community offers foster care as well as other services such as children’s homes and schooling for young people with additional needs.
In May this year, the company was sold to Cap10 Partners, a firm founded by private equity veteran Fabrice Nottin. The Frenchman previously spent nine years at US asset management firm Apollo Global and has sat on Watches Of Switzerland’s board.
Compass Community made a £3 million profit for the year to March 2023 on revenues of over £108 million.
The well-heeled lifestyles of the private equity tycoons are a world away from those of foster carers, who receive the equivalent of £7.50 an hour, which is less than the minimum wage, plus a basic allowance to pay for each child’s clothes and food.
Most are self-employed and so not entitled to workers’ rights including a minimum wage, sick pay, paid leave or pensions. Many rely on benefits.
One told this newspaper that foster carers ‘essentially work without any rights or protections whatsoever’ despite ‘enormous amounts of profit’ being made off their backs by private equity firms.
The 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 for the year to March from 45,370 in 2021.
‘The fewer foster carers we have, the more children who may end up in residential care, or in homes away from their families and friends,’ the charity’s chief executive Sarah Thomas said.
About 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 Stirling Square Capital spokesman said: ‘We are a long-term investor in health and social care and have owned NFG for nine years.
‘In this time, Stirling Square has never taken a dividend out of the business and reinvested all available profits back into NFG, which has – and will always – pay UK tax.’
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