Unis set for $70m windfall in IDP deal

Australia’s 38 major universities could reap about $70m each from their collective shareholding in IDP Education under a proposal to restructure their stake in the $6.8bn company.

Australia’s major universities could reap a major windfall from the restructuring of their stake in IDP Education. Picture: Damian Shaw

Australia’s 38 major universities could reap about $70m each from their collective shareholding in IDP Education under a proposal to restructure their stake in the $6.8bn company.

On Thursday the university’s holding company Education Australia, through which they own 40 per cent of IDP Education, said its 38 University shareholders are considering a “transformative” proposal which would allow them to take direct ownership in the international student services provider.

Under the terms of the proposal Education Australia would equally distribute 25 per cent of IDP Education to its university shareholders and divest the remaining 15 per cent via a market selldown by December 11, with most of the proceeds used to pay capital gains tax and the rest distributed as franking credits.

At current prices each university’s stake in the company will be worth just shy of $45m, and the Australian understands the tax benefit from the franking credits are worth about $25m to each institution.

The news sent shares in IDP tumbling by as much as 8.2 per cent to, before it closed at $22.79, down 5.94 per cent.

Education Australia said the deal means the universities, who say their revenue collectively fell by $1.8bn last year due to border closures and the loss of international students, will have the option of realising the value of their shareholding in the company.

“The Proposed Transaction would enable each shareholder to directly control its investment in IDP and benefit from further participation in IDP’s growth should it choose, while at the same time preserving IDP’s independence and broadening IDP’s publicly traded shareholder base,” the company said.

Education Australia chair Greg West said the proposed transaction was a milestone for the university sector.

“The Australian University sector, through Education Australia, has been involved with the IDP business since its formation 50 years ago,” he said.

“Education Australia and its 38 Australian university shareholders have been delighted to see the transformation of IDP into an independent ASX listed company.

“The Education Australia board is delighted to put forward the proposed transaction, which both unlocks value for our University shareholders, and enables IDP to continue its growth as an independent entity.”

But the universities will have to wait to completely sell down their stake, with the conditions of the transaction restricting any sell-downs for the first six months, and capping any disposal at 50 per cent for the next six months after that.

The 38 universities will vote on the deal at an EGM on April 13.