By Byron Kaye
SYDNEY, June 25 (Reuters) – A company owned by Australian universities said on Thursday it was raising cash by selling down its stake of a listed business that finds placements for foreign students, a sign of pressure on the education sector following border closures.
Education Australia, which is owned by 38 Australian universities, said it raised A$219 million ($150 million) by selling 5.1% of IDP Education Ltd to unnamed institutional investors, reducing its holding to 40%.
The sale sent IDP’s shares down 4.5% by late morning, outpacing a broader market decline of of 1.5%.
“The motivation of Education Australia shareholders wishing to reduce the holding in IDP does not relate to their view of the potential of IDP or its business,” Education Australia said.
“Most, if not all, of these Education Australia shareholders are motivated by the need to release funds for other purposes in their capital constrained universities, a need compounded by the impact of COVID,” it added.
A spokesman for IDP was not immediately available for comment.
Foreign students are a sizable revenue source for Australian universities. Since the government shut international borders to stop the spread of the coronavirus, universities have warned they might lose A$16 billion in revenue by 2023 due to foreign students being shut out.
In April, IDP joined a rush of Australian companies asking the sharemarket for additional cash, raising A$225 million, as the widespread shutdown of most public activities brought on an abrupt collapse in revenue.
In its statement, Education Australia said it would not sell any more IDP shares for six months and that it was “committed to support the future growth” of the company which has 100 offices in 31 countries.
($1 = 1.4560 Australian dollars) (Reporting by Byron Kaye; Editing by Sam Holmes)