Stage 2 arrangements approved for the SEEK Growth Fund
SEEK Limited (SEEK) has updated the market on the revised arrangements for Stage 2, the second five-year phase of the SEEK Growth Fund, commencing 1 November 2026 and approved by the Fund’s unitholders.
The revisions made by the Fund’s Trustee support three SEEK objectives: maximising the long-term value of its investment in the Fund, achieving material liquidity, and reducing its stake in the Fund over time.
Headline changes include:
- Investments classified as either Core Assets or Non-Core Assets
- Carried interest payable in respect of Stage 2 only if at least $840m of liquidity is made available to investors
- Management fees paid by SEEK reduced to approximately $17m per year
- No material changes to the governance arrangements of the Fund
SEEK CFO Kendra Banks hosted an analyst and investor conference call on 21 October 2026, from 10:00-10:30am (AEDT), in relation to the update.
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The $840m liquidity condition
Carried interest tied to liquidity
Carried interest is payable in respect of Stage 2 only if a minimum of $840m is made available to investors, in addition to the $233m already returned. For SEEK, this equates to approximately $700m, based on current holdings in the Fund and assuming that any liquidity is made available on a pro rata basis.
Until the $840m is made available, the Fund must distribute at least 80% of any net proceeds received. The announcement states this threshold is likely to be satisfied predominantly through asset sales.
Near-term sale pathway
The Fund remains focused on the potential near-term sale of investments currently valued at more than $1bn, providing a pathway to meeting the liquidity condition. The timing and amount of liquidity will continue to depend on investment performance, market conditions, valuation outcomes and execution considerations.
The sale pathway follows the SEEK FY2026 results, where management flagged plans for the near-term sale of Growth Fund investments valued at over $1bn, with further detail expected before the end of calendar 2026.
SEEK CEO and Managing Director Ian Narev said the revised arrangements are intended to support liquidity:
Ian Narev, CEO and Managing Director, SEEK
“…we are confident the revised arrangements provide a pathway to near-term liquidity. Linking the Fund Manager’s incentives to returning capital to investors and establishing a clear liquidity threshold for carried interest, supports a disciplined approach to realising value for all investors.”
Core vs Non-Core Assets explained
A growth fund invests in businesses expected to expand over time. Carried interest is a share of investment profits paid to the fund manager, usually once returns pass a minimum level known as the hurdle rate.
For SEEK shareholders, tying the Manager’s rewards to returning cash matters because the carried interest is payable in respect of Stage 2 only if the liquidity condition is met.
The Fund’s investments were reviewed and classified into two groups with differing strategies, fees and carried interest arrangements.
| Feature | Core Assets | Non-Core Assets |
|---|---|---|
| September 2026 valuation | $1.25bn | $499m |
| Strategy | Support businesses through next stages of development; returns of more than 20% per annum remain central | Support liquidity through disciplined and efficient divestments |
| Management fee | 1.6% per annum on starting value | No ongoing management fee; transaction fee of 1.5% on proceeds realised up to 1 November 2028, 0.5% thereafter |
| Carried interest | Applies | Does not apply |
Core Assets comprise investments where the original growth strategy and return expectations remain achievable. Their valuation was validated by recent independent reviews or transactions.
Non-Core Assets comprise investments where the original thesis is no longer expected to be achieved. Divestments take account of each investment’s natural lifecycle and prevailing market conditions.
Carried interest terms and lower fees
The other key carried interest terms for Stage 2, which have been benchmarked to market, are:
- Carried interest applies to the Core Assets only.
- An 8% per annum hurdle rate is based on the starting value of the Core Assets (the September 2026 valuation), plus all management fees paid during Stage 2.
- A rate of 17.5% for carried interest, to be reduced if the $840m liquidity is delayed beyond Stage 2.
- A 50:50 catch-up mechanism, which entitles the Manager to 50% of the incremental returns above the hurdle.
- Assessment based on aggregate Core Asset performance rather than performance of individual investments.
The catch-up applies until overall returns are split 17.5% to the Manager and 82.5% to ordinary unitholders. If the liquidity condition is not met, this adjusts to 16% for the Manager and 84% for ordinary unitholders.
Management fees
The Core Assets management fee is 1.6% per annum on the starting value, with no adjustment following asset sales or for CPI. Total management fees payable by SEEK in Stage 2 are expected to be approximately $17m per year based on the current value of the Core Assets, down from $18m per year in the first stage.
The $5m per year management fee relating to SEEK-owned assets (primarily Zhaopin and JobAdder) is no longer applicable, with those assets now managed directly by SEEK. No further performance fees are payable in respect of these assets.
Track record, SEEK’s stake and governance
Since the Fund’s creation in 2021, $233m has been returned to investors. SEEK has received $196m of distributions, representing 13% of invested capital.
Narev said the Fund has delivered a 12% return on investment, despite challenging macro conditions and valuation pressure across the sector. He said the performance was underpinned by revenue growth across the portfolio, particularly among the HR SaaS investments.
SEEK will make no further capital contributions to the Fund, so its current ownership of 83.8% is expected to reduce over time. The arrangements also include a broad framework for what happens beyond Stage 2 regarding carried interest and liquidity delivery, and SEEK will continue to evaluate its ownership position.
On governance, the Fund continues to be managed independently from SEEK. SEEK’s appointees to the Trustee board are Greg Roebuck and Ian Narev, and the other directors are Andrew Bassat, Raphael Geminder and Adam Lindell.
Stage 2 will end on a date to be determined by the Trustee, being no earlier than 6 months prior to, and no later than 6 months after, 1 November 2031.
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