Job listings outfit SEEK (ASX: SEK) has formally given up a majority holding in one of its fastest-growing subsidiaries, a day after revealing advanced negotiations were underway to sell off part of its investment in Beijing-based Zhaopin.
SEK shares have continued their downward slide this morning following yesterday's announcement to reduce exposure to Zhaopin, which currently accounts for almost half of group revenue and is one of the few segments reporting profit growth.
Yesterday the company also announced its co-founder CEO Andrew Bassat would be stepping aside to a leading role at SEEK Investments, to be broken apart from the core job listing businesses.
Today SEEK has confirmed its ownership in Zhaopin will be reduced from 61.1 per cent to 23.5 per cent with expectations for gross proceeds of $697 million, implying a $2.2 billion valuation for Zhaopin.
A consortium led by China-based Primavera Capital Group will become the new owner of the shares SEEK is selling off, making Primavera Zhaopin's largest shareholder with 76.5 per cent.
SEEK originally invested just US$20 million (AUD$27 million) in Zhaopin in 2006 with an implied valuation of $110 million.
"We are very proud of our journey with Zhaopin. When we first invested 15 years ago Zhaopin was a loss-making and distant number three player," says Bassat.
"Our long-term approach combined with the strong management team led by Evan Guo has transformed Zhaopin into a market leader across many key metrics and it now generates strong cash flows.
"The Consortium will play an important role in helping Zhaopin to deliver on its long-term growth strategy."
Bassat highlights SEEK has achieved a strong return of more than five-fold from the transaction, allowing it to rebalance its portfolio weightings.
"This transaction also creates significant balance sheet flexibility to re-deploy capital into high returning initiatives across SEEK," he says.Never miss a news update, subscribe here. Follow us on LinkedIn, Instagram and Twitter.
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