SEEK looks to sell down $2.2 billion Chinese business and reshuffle leadership

SEEK looks to sell down $2.2 billion Chinese business and reshuffle leadership

"It has been an incredible privilege to be the CEO of SEEK. I have worked alongside so many terrific people over the past 23 years with a shared passion for our purpose," says co-founder Andrew Bassat.

Job listings giant SEEK (ASX: SEK) will see its CEO Andrew Bassat move to a new role as it explores cashing in on its Chinese investment Zhaopin, which in the December half accounted for 46 per cent of group revenue.

SEEK has been on a tear since the COVID crisis began with shares hitting an all-time high above $31 each last week, despite a short seller report late last year that singled out Zhaopin alleging it was propped up by "zombie" businesses and fake resumes.

The Melbourne-headquartered company brushed those criticisms aside and has reported just a 1 per cent drop in EBITDA to $245.9 million for the first half, buffered by two divisions reporting profit growth - Zhaopin up 11 per cent to $77.3 million, and Online Education Services (OES) up 44 per cent to $26.8 million.

Both these companies form part of SEEK Investments, a business the group wants to make more independent with current group CEO Andrew Bassat set to take the helm from 1 July as he makes way for Ian Narev as his replacement.

Narev was formerly managing director and CEO of Commonwealth Bank (ASX: CBA) during the Royal Commission into banking misconduct, and became COO of SEEK in 2019.

Chairman Graham Goldsmith highlights it has been 23 years since Bassat co-founded SEEK.

"His vision and leadership have transformed SEEK from a start-up to one of Australia's most successful global technology companies. Andrew's contribution has been immeasurable, and he is held in the highest regard by the Board and SEEK's people," Goldsmith says.

"Leadership succession at SEEK has been a priority for Andrew and the Board. Andrew has decided that now is the time to transition away from the SEEK CEO role and focus his expertise and passion on growing Investments."

Bassat emphasises the group has built a company that he is very proud of.

"It has been an incredible privilege to be the CEO of SEEK. I have worked alongside so many terrific people over the past 23 years with a shared passion for our purpose," he says.

"The SEEK journey is just starting and my passion for the company and its people is as strong as ever. But now is the right time for a new leader for the next stage. And Ian Narev is the right leader.

"Ian is a very accomplished senior executive and it has been a delight to work alongside him the past two years. As well as bringing skills well suited to the next part of the journey, Ian's character and values give me great confidence that the SEEK culture will be preserved and enhanced under his leadership."

Goldsmith describes Narev as Bassat's natural successor.

"He brings a strong track record in digital transformation, strategy, and public company leadership," he says.

"During the last two years, Ian has led SEEK in partnership with Andrew and has had a tremendous impact in advancing the AP&A (Asia Pacific & Americas) growth strategy.

Zhaopin sell-down

SEEK confirmed today it was in advanced discussions with a consortium looking to acquire an ownership interest in Zhaopin, slating expectations the deal would value it at $2.2 billion, while SEEK would still hold 23.5 per cent in the Beijing-based group post-transaction.

Zhaopin generated $376.2 million worth of revenue in the December half out of a total of $819 million, meaning its sales are 69 per cent higher than the Australia-New Zealand business which is significantly more profitable with an EBITDA of $133.1 million over the six months.

"Zhaopin delivered a solid EBITDA result through a combination of improving billing trends and operating efficiencies alongside strategic investment," Bassat says.

The board believes both AP&A and SEEK Investments will benefit from a greater degree of independence, allowing them to be given more focus with two experienced executives leading the group's operating business and its investment arm.

"There are numerous benefits from a greater degree of independence and focus for SEEK and Investments," says chairman Graham Goldsmith.

"A more independent SEEK will resemble a pure operating business. AP&A's core operating performance will be the cornerstone of the company, whilst investors will retain significant economic exposure to Investments and Zhaopin.

Goldsmith says this will give SEEK greater capital flexibility for re-investment in AP&A and for dividends.

"An independently managed Investments, accessing external capital, can undertake aggressive long-term investment to build large businesses," he says.

"We are assessing a range of options and are confident that we will deliver the right outcomes for SEEK shareholders."

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