Seek is selling down its tech investment fund, which costs $17 million in annual management fees

Jobs platform Seek plans to sell down its startup investment arm for $700 million in cash, looking to address the high costs of external management of its VC portfolio

The ASX-listed technology company is winding back its exposure to the Seek Growth Fund, announcing revised arrangements ahead of its second five-year phase, starting next month.

Seek owns 83.8% of the fund and won’t make any more capital contributions as it winds down its stake. The fund’s total valuation fell by 13% in FY2026.

The independently managed fund is pursuing potential near-term sales of investments currently valued at more than $1 billion. Its manager will only qualify for performance fees for the new phase once at least $840 million is made available to investors, including around $700 million for Seek.

The portfolio has been divided into $1.25 billion of core investments, where the original growth and return expectations remain achievable, and $499 million of non-core assets where the investment thesis is no longer expected to succeed. Seek hopes its remaining stake will still deliver 20% growth

That means the proposed sales extend beyond the value of the non-core holdings. Seek didn’t identify which investments are earmarked for sale. The portfolio includes Employment Hero – which has had a fractious relationship with its key investor – as well as Queensland edtech Go1 and HR software platform HiBob.

For Seek and its fund manager, the challenge is converting portfolio valuations into prices buyers will actually pay, alongside balancing 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.

Time is still money

SEEK will still pay around $17m annually in management fees, down from $18m during the fund’s first five years. That’s still an $85m bill – more than 12% of its portfolio valuation – over the second five-year phase, payable regardless of whether the manager earns performance fees.

The fund’s performance fees now only apply to core investments, calculated at 1.6% of starting valuations and don’t reduce following asset sales. Non-core investments have no ongoing management fees, but earn transaction fees when sold.

A separate $5m annual fee for managing Seek-owned assets, primarily Zhaopin and JobAdder, also ends, with the jobs platform taking control of them.

Seek’s received $196m in distributions since the fund’s creation in 2021 – 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.

The revised terms are all about bringing in cash: until the liquidity threshold is reached, at least 80% of net proceeds received must be distributed.

To encourage offloading assets over the next two years, sales will have a 1.5% transaction fee for proceeds realised up to November 1, 2028, falling to 0.5% after that.

For a software business reducing its investment in other technology companies, its a sign of the competing demands of calming nervous shareholders and a side hustle in venture backing that may or may not pay off by the end of the decade.

“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,” Narev said.

“We believe this provides an enhanced framework to pursue strong investment outcomes while delivering meaningful liquidity to Seek.”

While its stock (ASX: SEK) recovered slightly in October, Seek shares are down more than 50% on 12 months ago.