IDP says the IPO will mean further investment in existing operations rather than new growth strategies.
How much of SEEK’s share will be sold on the Australian Securities Exchange, at what price and when hasn’t been disclosed but Warwick Freeland, GM and Chief Strategy Officer at IDP says it could be in the first half of 2014.
Proceeds from the IPO (initial public offering) will be used to grow the company’s three business lines: recruitment, IELTS testing and English language provision.
“It’s something that’s been considered by the shareholders for quite a period of time”
“It’s something that’s been considered by the shareholders for quite a period of time to work out what’s the next logical step for IDP and we decided that now’s the right time,” Freeland told The PIE News. “Having a more flexible capital structure would be better to enable our future growth.”
IDP is half-owned by Education Australia a consortium of 38 universities and half-owned SEEK. Education Australia has said that it wants to remain a significant shareholder while SEEK, a publicly listed company, has agreed to sell a portion of its shares to enable liquidity of the IPO.
SEEK bought into the company in 2006. After selling its remaining 80% stake in Think Education to Laureate for AUD$104 million last month it appears to be focusing more on its jobs website.
Earlier this month The Australian reported that SEEK stock analyst Digby Gilmour at brokers Patersons Securities said IDP isn’t a core asset for SEEK and he believes a full sale would make sense.
After successful expansion of its recruitment operations into other English speaking markets over the last four years and signs of a turnaround in its core market Australia, Freeland says the company is in a good place to go public.
“We’re speculating that the changes the government has made from a policy point of view is making Australia more attractive so we think the demand for Australia will be strong,” he added.
“We’re not raising the capital to do something radically different”
In 2012, IDP generated AUD$21 million in net profit of AUD$217m in revenue. Citigroup has valued the whole IDP business at $318m while Patersons Securities has been valuing it $440m. Goldman Sachs and Australia-based advisory firm Macquarie are joint lead-managing the float.
Freeland says the company’s growth strategies for the next year will focus on existing operations: placement services in English speaking markets, IELTS testing– of which the company is partner with the British Council and Cambridge English– and English language centres in Thailand, Cambodia and Vietnam where it teaches some 10,000 students a year.
“We’re not raising the capital to do something radically different. We’ll actually continue to run the business as we currently do,” he commented.