Intueri Education IPO

[Zaphod]

Agree, govt policy will always be a risk - but it would be a brave government that cuts funding to Quantum with its focus on 'second chance' education and upskilling of Maori and Pacfic Islanders

Cuts to PTE's that service the second chance sector have occurred progressively over the past few years as the TEC demands higher student outcome rates and pathways to further educational opportunities or getting them into workplaces. One large provider (900+ EFTS) was cut in the last few years, along with a number of smaller providers.

Although Quantum's student outcomes look highly appealing, you need to be careful of how they define a qualification. One method is to treat each unit as a qualification, thereby making results look much more favourable than those PTE's that define a complete set of units as a qualification. I do not know which method they are using.

I also note that the TEC announced that scaling the results of Maori and Pacific Islanders will return, after abandoning the practice a few years ago. This will probably result in much more favourable outcomes for those PTE's that are left servicing this market.

[Zaphod]

The other big growth driver is the opportunities in online education:

"In New Zealand, the online education industry is less developed than in Australia. Overlaying an online education component for Intueri’s existing courses (including QEG’s courses) will enable Intueri to more economically take advantage of opportunities to expand its student intake capacity and deliver courses at a lower unit cost per student. This in turn will allow Intueri to invest some of these savings in enhancing the student education experience with potential to thereby further drive increases in course and qualification completion rates. There is also the opportunity to roll out the online courses that OCA already has in Australia to the New Zealand market."

The NZQA placed a number of hurdles around online courses in New Zealand. Mostly, these revolve around assessment and requiring the use of proctors to validate the identity of the student. This obviously places some economic burdens on the provider. At one point I was involved with a trail of using various technologies (fingerprint scanner, webcams etc.) to verify student identity when taking examinations remotely.

Australia generally has a more favourable outlook towards online education, however it suffers from some other issues that we don't such as a lack of recognition of individual learning units between states.

I'm sure all these issue can be overcome though, especially once some of the technophobic NZQA staff retire!

[percy]

Zaphod.
Thank you for your interesting comments.

[Entrep]

After telling me they weren't getting any stock, ASB Securities have now said they might be getting some.

Perhaps demand for the IPO is not as expected?

Zaphod's comments also very interesting...

[percy]

To anyone who has considered this float,it would pay you to read what Tim Hunter has to say about it in an article on page D11 of this week's Sunday Star Times,headed Intuition says opportunism.
"This deal looks to me like a stinker."
"Investors are to pay between $169 million and $234 m for a stake of 75 to 85 per cent in Intueri,a group of businesses providing various sorts of training.The offer price implies Intueri would have a market capitalisation of between $225 and $275 m.The businesses comprising Intueri have mostly been gathered together since early last year for a total acquisition cost of up to $106.5 mil.Investors are,therefore,being asked to pay a premium of $125m to $175 m for a group of businesses that have yet to report a collective full year result."

[SimonHouse]

Wow, must get a copy of the SST this morning. Thanks for posting this Percy

[steve fleming]

To anyone who has considered this float,it would pay you to read what Tim Hunter has to say about it in an article on page D11 of this week's Sunday Star Times,headed Intuition says opportunism.
"This deal looks to me like a stinker."
"Investors are to pay between $169 million and $234 m for a stake of 75 to 85 per cent in Intueri,a group of businesses providing various sorts of training.The offer price implies Intueri would have a market capitalisation of between $225 and $275 m.The businesses comprising Intueri have mostly been gathered together since early last year for a total acquisition cost of up to $106.5 mil.Investors are,therefore,being asked to pay a premium of $125m to $175 m for a group of businesses that have yet to report a collective full year result."

Hi Percy,

haven't read the article but from your 'cut and paste' looks like the journo is pretty unsophisticated.

The whole point of the uplift is that it is private to public play, rolling up private education businesses and taking advantage of the uplift in multiples for what you can pay for private businesses (i.e. 4x) to what the public markets are willing to pay (say 10x etc).

Look at a company like GEM, one of the most successful aSX companies in recent times - paying 4x for childcare centres, then the market immediately re-rates it to 20x or something.

Also, Arowana have held many of the businesses for far longer time - its just that AWN only listed last year, that is why there is no full year earnings reported.

Looks like a typically ignorant business journalist trying to push an angle that he no real understanding of.

In the markets, it is the future earnings that drive valuations, the past is less relevant. A concept usually too hard for journos to grasp.

This is no hick business, it is NZ's largest private, provider of vocational services, going to be paying 5% + dividends and double digit growth.

Would have thought NZ would want to be falling over backwards to encourage these sort of businesses to list....never mind, if NZ'ers don't understand value, maybe the aussies will (i.e. look at NVT / VOC)

[noodles]

Percy,

I did read the article. He fails to mention the Intueri NPATA forecasts. This is really what the focus should be on. I don't think they are aggressive ratios for FY15.

I'm still undecided on the float. Even at the high end of the price range, it will be cheaper than aussie peers. My biggest problem is that I can't spell or pronounce the name of the company

Noodles

[Entrep]

Is the NZ Govt going to continue to subsidise a NZX listed company so that it can retain current big margins?

[heisenberg]

http://www.stuff.co.nz/national/9986...ol-near-Huntly

Perhaps the listing price will be on the lower side of estimates....