IDP Education makes pitch to fundies
Oct 21 2015 at 12:15 AM Updated Oct 21 2015 at 12:15 AM Sarah Thompson , Anthony Macdonald
IDP Education's float is set for a collision course with the Melbourne Cup, with the race that stops a nation also threatening to disrupt marketing for the $500 million-odd ASX debutant.
IDP is preparing to raise about $200 million through Goldman Sachs and Macquarie, which would see parent SEEK Ltd and its co-investors offer up about a 40 per cent stake. [SEEK owns 50 per cent of the education company, while a group of universities own the other half.]
While initial public offering marketing has only just begun - as revealed by Street Talk Online on Tuesday - the shareholders and advisers are already thinking about whether to accelerate the raising ahead of the Melbourne Cup or wait until the week after.
Goldman Sachs and Macquarie analysts are booked for two weeks of pre-deal marketing, with IDP management scheduled to be out as soon as next week.
IDP provides counselling and assistance to prospective students and their families on studying abroad, placing students into universities in Australia, the US, UK Canada and New Zealand. It also co-owns the IELTS language test, which tests proficiency in English among non-English speakers.
Macquarie expects the company to have $357.3 million revenue for the 2016 financial year and $58.7 million earnings before interest, tax, depreciation and amortisation, on a proforma basis. Profit was forecast to be $35.5 million, up from $30.3 million in the year to June.
The analysts reckon IDP should trade at 16.6-times to 19.9-times forecast profit and at a 3.9 per cent to 4.5 per cent dividend yield. They compared it to the likes of Navitas and Intueri Education Group, along with the usual investor favourites like Corporate Travel Management, Domino's Pizza Enterprises and Cover-More Group.
Fundies are expected to push for a deal around the 15-times mark, which would be a 10 per cent discount to Navitas.
Emergency Services & Sate Superannuation board member and former Merrill Lynch and Goldman Sachs executive Ariane Barker will parachute on to IDP's board in time for the listing, along with Universities Australia chief executive and Beach Energy non-executive director Belinda Robinson.
The pair join chairman and former Colonial Group fundie Peter Polson, IDP chief Andrew Barkla, vice-chancellor of Federation University Australia David Battersby and former Bankers Trust banker Greg West around the boardroom table.
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