SEEK Ltd Capital Raising

SEEK Limited, owner of Australia’s number one jobs website, seek.com.au, has revealed two initiatives to strengthen and build upon its education and training businesses, through capital raising.

The company aims to raise $100 million through a share placement together with further funds through a share purchase plan and top-up offer.

The Bassat brothers began seek.com.au in 1997 and alongside the Australian and New Zealand jobs classifieds websites SEEK also operates an online training and development business in Australia, New Zealand and the UK (seeklearning.com.au and seeklearning.co.uk) and a niche employment website in the UK targeting Australian and New Zealand jobseekers (seek.co.uk). SEEK Limited has been part-owned by Australia’s largest media group, PBL, since 2003 and the company launched on the Australian Stock Exchange (ASX) in April 2005.

The focus on expanding its involvement in education and training businesses corresponds with the downturn in the Australian jobs classifieds market. A press release about the SEEK Employment Index (SEI) for March showed the job market was continuing to tighten. The SEI, which measures the ratio of new job ads to job applications on seek.com.au, fell by a seasonally adjusted ­9.7 per cent in March, suggesting greater competition for jobs. The number of new job advertisements also fell by a seasonally adjusted ­9.4 percent for February.

A statement from the company quotes Paul Bassat, Joint CEO of SEEK, as saying:

“We are conducting the capital raising to enable us to further our exposure to the exciting Education and Training market. We believe that the education businesses will continue to strongly complement our market leading position in online employment classifieds in Australia and New Zealand and our international investments in China, Brazil and South East Asia.”

SEEK will use the funds to acquire the remaining 50% of THINK Education Group (THINK), for $42.5 million (and repayment of THINK’s debt of approximately $14.5 million), and intends to offer to purchase up to an additional 10% of IDP, with any remaining proceeds used to partially pay down debt.

THINK has the broadest group of private colleges in Australia spanning across Hospitality & Tourism, Creative, Media & Communications, Business and Healthcare & Wellness. THINK has campuses in Sydney, Brisbane, Gold Coast and Melbourne and flexible & online learning capabilities.

Under the current plans, THINK will continue to operate as a separate entity. Commenting on the acquisition Andrew Bassat, Joint CEO, said:

“THINK provides SEEK with a unique collection of existing colleges and an online learning platform which are highly complementary to SEEK’s Education businesses. The full acquisition of THINK is a key step in enabling SEEK to realise its vision to be a leading provider of education and training. We expect that strong growth in THINK will be underpinned by growth in student numbers as individual courses move from start-up to steady state and by further acquisitions.”

IDP is the global leader in the placement of international students to Australian education institutions and the 100% owner of IELTS Australia, the leading supplier of English language testing services in Australia.

SEEK’s offer to purchase up to an additional 10% of IDP is subject to negotiation with, and approval by, Education Australia and acceptance by the University Shareholders. IDP is currently co-owned (50%) by SEEK and (50%) by Education Australia Pty Ltd, which is equally owned by the 38 public Australian Universities.

Andrew Bassat said:

“The acquisition of each of THINK and IDP (if our proposed IDP offer is accepted) is expected to be modestly accretive on an earnings per share basis (post the proposed capital raising described below in FY10) and to become increasingly accretive from FY11. We believe that by making these transactions, we will create significant long term value for shareholders.”

The company has reaffirmed the guidance of $93.5m EBITDA it provided around its half-year announcement in February relating to its FY09 results.

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