Private equity group 3i has invested €2 million in a childcare company with ambitions to open outlets around the State.

Giraffe Childcare opened its first operation last December in the International Financial Services Centre and has since added three more units.

It plans a further 15 units in Dublin and its surrounding dormitory towns within the next five years, followed by expansion to other parts of the State.

Though new in Ireland, the provision of multiple facilities from a single childcare provider is more common in Europe and both the company founders and 3i are confident of its prospects.

The private equity group, better known in Ireland for its investments in technology companies, was only put in contact with Giraffe Childcare at the beginning of this month but completed the deal yesterday.

Mr Clive Austin, director of 3i, said: "There is significant demand for their services in this market and, with a strong brand and an ambitious growth plan, this is exactly the type of company that we are looking for."

Although this is 3i's first move into childcare in Ireland, it has several investments in the sector in Britain.

"The market in Ireland lags other areas of Europe and that gives a certain opportunity to a strong team," said Mr Austin.

The investment will give 3i a minority stake in Giraffe Childcare. The other shareholders are chairman Mr Tony Kilduff and joint managing directors Mr Simon Dowling and Ms Mary-Ann McCormack.

Ms McCormack previously ran a childcare facility in Dublin with her husband. Mr Dowling has a history in retail.

He said linking up with 3i would allow Giraffe access to the necessary capital and networks to achieve its goal of becoming the dominant player in Ireland.

He said the scale of Giraffe's operation - each outlet of between 6,000 and 6,500 square feet caters for 95 - allowed it access to specialised care, such as special needs teachers and emergency medical back-up.

But he called on the Government to take action to address the costs of childcare. "People need some sort of tax credits or capitation grants, whichever is considered more acceptable," he said. "Existing incentives do not address the needs of the childcare user. Parents simply cannot afford to meet the rising costs of childcare. This is no longer a cottage industry and providing care of a proper standards costs money."