Seek plans $700 million cash wind-down from growth fund

By Nathan Brooks

Seek said it plans to receive about $700 million in cash by selling down its stake in the Seek Growth Fund, the ASX-listed jobs platform’s move to cut the high cost of external management.

Seek’s revised arrangements come before the independently managed fund’s second five-year phase starts next month. Seek owns 83.8% and will make no more capital contributions as it winds down that holding.

Seek reported that the fund’s total valuation fell 13% in FY2026. Its independently managed manager is pursuing potential near-term sales of investments currently valued at more than $1 billion.

Under those revised terms, the manager earns performance fees only after at least $840 million has been made available to investors, including around $700 million for Seek. Until the threshold is reached, at least 80% of net proceeds received must be distributed.

Seek’s portfolio split makes the trade-off explicit:

• Core investments: $1.25 billion. Seek says the original growth and return expectations remain achievable.
• Non-core assets: $499 million. Seek no longer expects the original investment thesis to succeed.

Seek still hopes its remaining stake will deliver 20% growth despite the wind-down.

Under Seek’s proposal, the sales program extends beyond the $499 million value of the non-core holdings, meaning some core investments may also be sold. Seek did not identify which investments are earmarked.

Seek’s disclosed holdings include Employment Hero, Queensland edtech Go1 and HR software platform HiBob. Employment Hero has had a fractious relationship with its key investor.

Seek and the fund manager identified the central challenge: converting portfolio valuations into prices buyers will actually pay. They also must balance faster exits against the possibility of better returns later.

“Our priority is, and has always been, to maximise the value of our investment in the Fund and receive liquidity over time,” Seek CEO Ian Narev said.

Seek will still pay around $17 million annually in management fees, down from $18 million during the fund’s first five years.

That creates an $85 million bill over the second five-year phase. The charge exceeds 12% of the portfolio valuation and remains payable regardless of whether the manager earns performance fees.

Seek’s revised performance-fee terms divide the assets again:

• Core investments: Performance fees equal 1.6% of starting valuations and do not decline following asset sales.
• Non-core investments: No ongoing management fees apply, but the assets generate transaction fees when sold.

Seek also disclosed the end of a separate $5 million annual fee for managing company-owned assets, primarily Zhaopin and JobAdder. The jobs platform will take control of those assets.

Since the fund’s creation in 2021, Seek has received $196 million in distributions, equal to 13% of invested capital. Narev said the fund has delivered a 12% return thus far.

“This performance has been underpinned by revenue growth across the portfolio, particularly among the HR SaaS investments. SEEK and the Fund remain fully aligned on these objectives, and we are confident the revised arrangements provide a pathway to near-term liquidity,” he said.

Narev also said linking the manager’s incentives to returning capital and establishing a clear liquidity threshold for carried interest supports a disciplined approach to realizing value. The framework can pursue strong investment outcomes while delivering meaningful liquidity to Seek, he said.

Seek’s revised terms also add a two-year incentive for selling assets. Sales proceeds realised through November 1, 2028, carry a 1.5% transaction fee, which falls to 0.5% after that date.

What does this change for Seek shareholders?

The change reduces a venture side project that may or may not pay off by the end of the decade, while Seek tries to calm nervous shareholders. The share-price backdrop remains weak. Seek shares (ASX: SEK) recovered slightly in October, but remained more than 50% below their level 12 months earlier.

For shareholders, the immediate benefit is a path toward cash and lower related fees. The trade-off is execution risk: Seek has not named sale targets, and buyers must pay for more than $1 billion in stated values.

Until the $840 million liquidity threshold is met, at least 80% of net proceeds received must go to investors. The next two years will test whether Seek can convert portfolio marks into bids, distribute cash under that rule and preserve the 20% growth it hopes its remaining stake will deliver.