Universities in Australia are attempting to recoup some of the financial losses caused by Covid during the last year and a half. Education Australia, a cooperative of Australia’s universities, sold 38 of the country’s institutions’ shares in IDP Education. IDP is based in Melbourne and is one of the world’s major international education firms. It was founded over 50 years ago with the support of a collection of Australian institutions known as Education Australia. Prior to Education Australia’s decision, the company had been experiencing revenue declines. Prior to the sale, Education Australia maintained a 40% share in IDP Education on behalf of Australian universities.
Iain Watt, deputy vice-chancellor and vice-president (International) at the University of Technology Sydney, told the PIE, “This has come at a fantastic time for universities.”
“Australian universities made this investment many years ago and have continued to expand and invest in IDP ever since. And, obviously, when you’re in financial trouble, it’s a wonderful moment to liquidate your assets. Selling the shares would undoubtedly assist us in either offsetting losses or providing liquidity.” Education Australia chairman Greg West had previously stated that the deal was a key milestone for both Education Australia and IDP. He reminded the audience that Australia’s university sector had been involved with IDP Education since its inception and had seen it grow into a highly successful international education brand over five decades.
Andrew Barkla, CEO and managing director of IDP, said the company’s lack of reliance on a single market, as well as its diverse business model and long-term strategy, had allowed it to navigate the pandemic’s disruptions despite financial downturns. The funds may not be available to the universities right now since the earnings from the sale — worth approximately $1.14 billion and accounting for 15% of the institutions’ holdings in IDP – would be required to pay off a huge capital gains tax liability first.
Following that, the corporations would receive their portion of the remaining 25% of the stock, as well as franking credits on their tax payments. Following that, they will be able to control their own share packages from their own individual bag, with a total value of approximately $2 billion as part of their combined 25 percent stake. This will also result in the collapse of Education Australia, as the rationale for its formation would no longer exist.
Individual institutions are expected to be allowed to sell half of their shares after six months and the remaining half after a year, according to the agreement. It’s also because they have to wait for a six-month escrow term because the shares are held in escrow. Many of the 38 Australian institutions engaged may be able to offset some of the monetary losses they have been experiencing as a result of a sharp drop in international student numbers by harnessing the earnings from the sale of their IDP shareholdings.
Watt expressed his opinion on whether or not individual institutions will be able to offset some of their revenue losses by the sale of shareholdings, stating that this was “true for tiny universities.” On the ASX, IDP’s stock closed at $32.87 on September 24th. The company is still going strong because to its extremely successful IELTS English testing module, which it co-owns with Cambridge University and the British Council for a third of the company.