SEEK's Structural Separation to Enable Future Growth

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SEEK’s Structural Separation to Enable Future Growth

  • SEEK Growth Fund will led by Seek co-founder Andrew Bassat.
  • Fund has capital commitments totalling $460 million, including $200 million from SEEK. and $260 million from other investors.  
  • SEEK is to retain its existing economic exposure to these two high growth businesses.

SEEK Limited (‘SEEK’ or the ‘Company’) dominates the Australian online job advertising and recruitment market, reputedly capturing 90 percent of time spent online looking for jobs and 30 percent of job placements. It has expanded its business model and established market-leading positions in Asia and Latin America.  SEEK also operates an online vocational education business.

More recently it has established the 'SEEK Growth Fund' which houses Online Education Services (OES), a software and services provider to universities to assist in the recruitment and management of online students. The Fund will also seed a portfolio of early-stage ventures in the employment technology and education technology sectors.

SEEK Growth Fund

The establishment of the newly formed unit trust, the SEEK Growth Fund, follows a strategic review of options aimed at providing a greater degree of independence and focus for SEEK’s Asia Pacific & Americas and SEEK Investment businesses.  SEEK generates strong cash flows from its core online employment businesses that self-fund the significant growth opportunities in these businesses, while retaining the capacity to pay shareholder dividends.

It also houses 14 early-stage ventures (‘ESVs’) and Online Education Services (‘OES’), an online vocational education business. These businesses, at the time of establishing the SEEK Growth Fund, accounted for 11 percent of SEEK’s market capitalisation and were valued at $1,215 million. SEEK intends to exchange its interest in this portfolio of early-stage businesses for units in the Fund. The transfer of all assets o the Fund is expected to occur before 31 December 2021.

The ESVs and OES have very different cash flow and risk profiles to SEEK and require substantial growth capital within a short time-period, in order to aggressively build scale. This explains the rationale for the SEEK Growth Fund. A structural separation of the 2 businesses enables SEEK to maintain its strong operating cash flows to grow its existing Asia Pacific & Americas businesses, while paying shareholder dividends. It also obviates the need to commit capital to the SEEK Growth Fund, while retaining an economic interest in the Fund.

SEEK Growth Fund on the other hand, requires considerable growth capital and a willingness to support sustained periods of negative cash flows and accounting losses, while building the ESVs that comprise the Fund’s portfolio. This capital can be sourced externally (to SEEK) and from investors with an appetite for aggressive long-term, capital growth investments that are not cash generative during their formative years. This enables the seeded assets to adopt more aggressive re-investment strategies that were difficult to implement under the prior operating model.  OES also stands to benefit from ongoing investment and a close cooperation with the ESV education portfolio of complementary businesses.

The Fund will be led by Seek co-founder Andrew Bassat. The Fund has received capital commitments totalling $460 million, comprising $200 million from SEEK and $260 million from other investors.  Andrew Basset and other members of the management team have committed $80 million to the SEEK Growth Fund.

The structural separation is a rational decision that caters for different long-term investment decisions that are appropriate to the different needs of two distinct businesses; one that is well established and highly cash flow generative, with ongoing growth opportunities, and another that requires substantial cash investment to create long-term shareholder value. SEEK is set to retain its existing economic exposure to these two high growth businesses.

Caroline Wong

Caroline Wong is a Research Analyst at KOSEC – Kodari Securities. She writes on markets and focuses on ASX Top 300 companies. Email Caroline at

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