Keypath Education International, the online higher education provider, slipped as much as 8.4% in its Australian initial public offering this week.

The firm’s shares were priced at A$3.71 when floated on 2 June but traded down as low as A$3.40 before recouping some ground to A$3.50 – nearly 6% below the IPO price.

Keypath Education’s IPO, led by Macquarie, was seen by some as a test for the investment bank, which led the successful flotation of software provider Nuix in December but which now trades at less than half its IPO price.

Despite the post-IPO drop in Keypath Education’s share price, several Australia-based sources pointed to the organisation’s positive prospects.

One commented: “I think it dipped because the press was having a go at Macquarie. It’s not like Keypath was owned by Macquarie, whereas Nuix was their invested company. I think it’s a storm in a teacup.”

Keypath Education – which has been loss-making since its inception in 2014 and is expected to remain so this year and next – raised A$212.1 million through its IPO.

Chicago-based investment fund Sterling Partners retains majority ownership (65%-plus) of Keypath Education following its IPO.

Another source familiar with the business and Asia-Pacific capital markets described the flotation as “kind of stage one with a booster” and said to “expect M&A” following the capital injection.

According to its prospectus, Keypath Education is targeting opportunities in Southeast Asia.

At present, nearly half (45%) of Keypath Education’s revenue is generated in Australia, whose higher education sector has come under significant strain over the past 12 months amid the outbreak of Covid-19, which closed borders to international students.

Date published: 2 June 2021

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