Seek plans to float Chinese employment website Zhaopin

Seek plans to float Chinese employment website Zhaopin

November 29, 2013

Jessica Gardner, Jake Mitchell

Seek chief executive Andrew Bassat says the company has to float its Chinese employment website Zhaopin to take advantage of a preference from local workers and government towards listed companies. Seek would maintain a controlling stake in Zhaopin following the float, but defended plans to sell down its ownership of the fast-growing asset, of which it holds 80 per cent.“We are convinced that there is a real benefit to being listed rather than being private,” he told shareholders at Seek’s annual meeting in Melbourne. “There’s a status associated with it.”

Mr Bassat said it was easier to attract and retain staff to a listed company and the Chinese government also treated listed vehicles differently.

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“We have become convinced that what is right for the business is an IPO and we’ll try to do that in a way that makes it right for Seek,” he said.

The plan to retain a controlling stake in Zhaopin is in contrast to Seek’s announcement that it would sell down its 50 per cent stake in international student recruiter and English exam provider IDP Education. The company announced that, subject to market conditions, it would float IDP in 2014. Seek owns the business alongside 38 Australian universities.

Mr Bassat said the proceeds from the IDP float would be used to invest in Seek’s overseas opportunities. He also said the company could return some capital to shareholders.

BBY analyst Mark McDonnell said a float of IDP reflected Seek’s bullish view of the IPO market, as well as confidence in its core business.

“They are de-weighting their counter cyclical defensive business in education … They would rather be weighted towards their online job search function,” he said.

The company sold its 80 per cent stake in Think Education Group to Laureate International Universities for about $104 million this month.

IDP had a net profit of $21 million in 2012-13. Analysts have said the company could be worth more than $300 million.

It is understood Goldman Sachs and Macquarie Group have been appointed to co-ordinate the potential float.

The job advertising and education company reiterated guidance provided at the full-year results for the overall group, as well as the international and education divisions.

But it upgraded guidance for its domestic online job advertising division. Based on ad volume trends in the year to date, revenue and earnings before interest, tax, depreciation and amortisation in 2013-14 will be “slightly ahead” of the prior year. Mr Bassat said some economic confidence was returning. “It feels a little bit more positive to us and that’s been reflected in our ad volume,” he said.

Seek shares surged 5.9 per cent, or 73¢, to close at $13.13.