Portfolio Update: Sale of IDP Education (ASX: IEL)

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Portfolio Update:
Sale of IDP Education (ASX: IEL)

11th June 2025

Across the Australian Equity component of investor portfolios, we have sold IDP Education (ASX: IEL).

Why we originally invested:

Our thesis was based on the structural growth of international student mobility from developing markets (e.g., China and India) and IDP’s unique position as a global leader in both English language testing and student placement. These vertically integrated services created a strong competitive moat.

Why we held despite headwinds:

IDP has a solid balance sheet, has been gaining market share, and was expected to rebound after a trough in FY25e. We believed policy certainty post-elections in Australia, Canada, and the UK would help stabilize volumes, with signs of recovery already visible in some markets.

Recent developments driving our exit:

Trading Update: Student placement and language testing volumes are expected to fall 28–30% and 18–20% vs. FY24, significantly worse than forecasted.
UK Policy Shift: A new white paper on immigration introduces renewed uncertainty, delaying expected recovery.
FY26e Outlook: Enrolment pipeline weakness suggests ongoing pressure into FY26e, pushing out the recovery story to FY27e.
China Delay: Regulatory hurdles are delaying the lucrative China IELTS opportunity (40% of global market).
Cost Base: Management aims to position the business for eventual growth, but structural cost reductions are constrained due to a people-heavy cost base.
Other Considerations: Possible ASX100 removal and tax management as FY25 ends.

While IDP remains a high-quality business with long-term potential, the near-term outlook has materially deteriorated. We believe the recovery and any associated market re-rating are unlikely before FY27e. We will reconsider the opportunity if policy clarity improves and early signs of volume recovery emerge.

In the short term the proceeds will be held as cash – further updates will be provided as they are redeployed.

As always, thank you for your ongoing support, it is very much appreciated. If you have any questions or would like more information, please contact your adviser.

Warnings and disclosures

This material has been prepared for general information purposes only and not as specific advice to any particular person. Any advice contained in this material is General Advice and does not take into account any person’s individual investment objectives, financial situation or needs. Before making an investment decision based on this advice you should consider whether it is appropriate to your particular circumstances, alternatively seek professional advice. Where the General Advice relates to the acquisition or possible acquisition of a financial product, you should obtain a Product Disclosure Statement (“PDS”) relating to the product and consider the PDS before making any decision about whether to acquire the product. You will find further details of the service we provide and any cost to you within the Financial Services Guide. Any references to past investment performance are not an indication of future investment returns. Prepared by EP Financial Service Pty Ltd ABN 52 130 772 495 AFSL 325 252 (“Elston”). Although every effort has been made to verify the accuracy of the information contained in this material, Elston, its officers, representatives, employees and agents disclaim all liability (except for any liability which by law cannot be excluded), for any error, inaccuracy in, or omission from the information contained in this material or any loss or damage suffered by any person directly or indirectly through relying on this information.