Asia’s growing demand for education has inspired a student placement company to test the waters of what’s becoming an increasingly lively Australian market for initial public offerings.
Seek Ltd., Australia’s biggest online job ads company, said Thursday it was planning to float its IDP Education joint venture on the Australian Securities Exchange next year. It joins a host of companies, including free-to-air broadcaster Nine Entertainment Co. and packaging firm Pact Group Ltd., with IPOs either in train or on the drawing board as global equities markets continue their shaky but strong recovery.
Seek owns half the business, with the rest split between 38 Australian universities involved in the Education Australia Ltd. vehicle. Macquarie Group and Goldman Sachshave been appointed to manage the float, for which Seek said it would offer an as-yet-undetermined portion of its shares.
Founded in 1969, IDP Education employs more than 1,200 people in 31 countries. In the year through June, it posted revenue of 216.9 million Australian dollars (US$200.0 million) and net profit of A$21.2 million.
It claims to have placed students from Asia and the Middle East into more than 400,000 tertiary courses in Australia and other key English-speaking destinations, including the U.S. and U.K.
Western universities are competing hard to attract Asians from fast-growing economies such as China, with some Australian institutions even appealing to Asia’s tiger moms with alcohol-free dorms and gender-segregated floors.
Foreign education is Australia’s fourth-largest export, behind commodities like iron ore and gold, generating about A$14.5 billion in export revenue annually.
Since the financial crisis, though, universities in the U.S. and Europe have stepped up competition for international students in response to government funding cuts. Australia’s education industry has also been hurt by a strong Australian dollar, which until recently had recorded its longest stretch above parity with the U.S. greenback in three decades.
Still, a recent survey of 1,000 mainland Chinese by HSBC ranked Australia as Asia’s top education destination, lagging only the U.S., U.K. and Canada globally. Investors currently have the option of investing in university program provider Navitas Ltd., whose shares have risen around 40% over the past 12 months, giving it a market value of A$2.4 billion.
The only other sizable Australian education-related stock is G8 Education Ltd, a childcare-services provider which has more than doubled in value in the past year.
