Purchase of IDP Education Limited (ASX:IEL)

Across the Australian equity component of investor accounts, we have bought IDP Education Limited (ASX: IEL), a global leader in international student placement services & English language testing.

IDP Education’s two key business segments, English Testing & Student Placements, operate in very close verticals and are mutually beneficial. Through an extensive testing centre network, IDP Education provides high-stakes English Language tests for immigration and student visa requirements. We like that the industry has been very stable historically, with only a few providers recognised by immigration departments, creating high barriers to new entrants.

We are positive on the outlook for IDP Education for the following reasons:

  • IDP Education is an integrated market leader with a strong network effect. Through offering both English testing and placement services, IDP Education has become a natural one-stop shop for international students looking to gain a student visa and study abroad. In turn, the large pool of international students makes IDP Education an ideal partner for higher education providers looking to fill their international student allocation;
  • India’s rising middle class and growing population have provided structural tailwinds for students studying abroad. We expect IDP Education to continue taking market share in this large and growing international student market, resulting in strong revenue growth;
  • Earnings growth is to be supported by further margin expansion as IDP scales its placements business and achieves greater operating leverage. Placements is a high-margin segment for IDP and will drive margin expansion at a group level as it becomes a higher proportion of the business mix.

The purchase of IEL has been funded through the sale of Lendlease (ASX: LLC).

If you have any questions or would like more information, please contact your adviser.

Warnings and disclosures
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