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IDP Education surges on India acquisition

IDP Education surged 20% on Friday after it announced it would acquire the British Council’s Indian IELTS operations for £130 million.

India is the largest IELTS market globally by volume and has exhibited one of the highest country growth rates in recent years with historic annual volume growth of approximately 21% between CY10 and CY19 prior to the impact of COVID-19.

IELTS, and the high stakes English language testing industry in India more broadly, benefits from several supportive drivers including strong population growth, a relatively young demographic, a high propensity to study abroad and high levels of demand for migration to English speaking countries.

IDP and the British Council currently both administer IELTS tests in India operating parallel distribution networks. The acquisition will bring the operations solely under IDP ownership, establishing a single network that provides the foundation for IELTS to build on its leadership position in India.

The acquisition is highly strategic for IDP aiming to provide several benefits:

  • Increased exposure to the high-growth Indian IELTS market

  • Simplified distribution arrangements to improve the delivery of IELTS to test takers in India

  • Continuity for IELTS customers by delivering a consistent, trusted test experience

  • Scope for material combination benefits with estimated run-rate synergies of $6-$8 million expected to be delivered within 24 months of completion

  • De-risked integration given IDP’s existing leading market position and deep understanding of the Indian market

  • A financially compelling transaction for IDP shareholders with EPS accretion of approximately 13% (pre-synergies)

Andrew Barkla, CEO of IDP, said “Test takers and organisations can continue to have confidence their IELTS score is a true and trusted reflection of their language ability. This agreement enables us to build on IDP’s focus on enhancing services to test takers in India.”

The transaction remains subject to customary completion conditions, and is expect to be finalised by August 2021.

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