IPO Watch: Keypath Education will be the ASX’s next edtech company as well as its largest
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Most ASX edtech stocks are small caps with market capitalisations below $200 million but that will change when Keypath Education (ASX:KED) lists next month.
Keypath Education will IPO on the ASX next month, currently pencilled in for Wednesday June 2, with a market capitalisation of over $770 million.
The company will have raised $212.5 million at $3.71 per share in an offer underwritten by Macquarie.
It runs online university courses (predominantly post-graduate) through its technology and data platform KeypathEDGE and is partnered with 32 universities across Australia, North America, Britain and Malaysia.
The company began in 2014, employs 550 people worldwide and made $55 million in revenue in FY20 through a share of tuition fees paid to university partners by students undertaking the course.
Keypath Education has told investors that online education will continue to grow in the years ahead. While online education has surpassed on-campus education as the preferred study mode for postgraduate students it is still only 2 per cent of the global higher education industry.
“Our modern lives and future of work demand modern, scalable education solutions,” said CEO Steve Fireng in his company’s prospectus.
“By partnering with leading universities, we seek to meet the growing demands of this market opportunity, designing industry-relevant online programs which deliver on student experience and quality outcomes.”
The ASX is home to a handful of edtech companies, many of which benefited from COVID-19 as many educational institutions went online.
However not all have performed well from a share price perspective. The top performer is Janison Education Group (ASX:JAN) which has more than doubled in a year thanks to a rapid roll-out of its online assessment and training software.
In recent weeks it has been accredited by the OECD as sole provider in Australia and the UK for the PISA for schools assessment (a global program used to test reading and science literacy) and has surpassed 200 schools in Australia.
Another is 3P Learning (ASX:3PL) which runs educational software – most notably Mathletics and Spellodrome.
While its growth has been modest, it has impressed investors with its earnings growth as well as M&A activity – recently announcing plans to Merge with private edtech company Blake.