Jobs platform SEEK (ASX: SEK) has sold down part of its stake in employment management solutions company Employment Hero for $95 million to US private equity giant KKR in a deal that has been struck at 19 per cent above the company’s book value for the asset.

The sale by SEEK Growth Fund will settle before the end of March this year but the investment arm of SEEK says that after the transaction it will retain “a meaningful stake in Employment Hero”, a company that it has backed for some time.

The Sydney-based Employment Hero achieved double-unicorn status at the end of 2023 with a valuation of more than $2 billion after a $263 million in Series F capital raise.

Founded in 2014 by Ben Thompson and Dave Tong, the company revealed earlier this month that it has topped $255 million in annualised recurring revenue after growing its customer base to more than 300,000 small and medium-sized enterprises globally.

Further growth is expected after Employment Hero announced in January its acquisition of Canadian employment platform Humi for C$100 million ($112 million).

The SEEK Growth Fund, which invests in high growth technology businesses, will receive $95 million from the sale and SEEK’s share of proceeds will be about $79 million, which the company says implies a valuation for Employment Hero of about 19 per cent above that recorded in its accounts at 30 June 2024.

For private equity group KKR, its investment in Employment Hero is the latest “technology growth” play in the Australian market which is focused on the small to medium-sized business sector.

“We look forward to supporting the continued platformisation and international expansion of Employment Hero, which has established itself as a leader in human resources management in multiple markets including Australia, the UK, and Canada with its cloud-native and comprehensive product suite,” says Mukul Chawla, partner and head of Asia Pacific Growth Equity at KKR.

Thompson, the CEO of Employment Hero, has welcomed the backing from KKR which he anticipates will be a long-term holding.

“KKR’s significant experience, resources and network will be extremely valuable in our efforts, particularly as we look to further develop our international footprint,” says Thompson.

Among the highlights noted by Thompson for Employment Hero in 2024 is the processing of more than $125 billion in payroll for over two million employees. The company provides end-to-end human resources management, payroll, recruitment, and employee engagement tools covering every stage of the employee lifecycle.

Despite the selldown, SEEK Investments’ CEO Andrew Bassat has affirmed SEEK Growth Fund’s faith in Employment Hero’s growth trajectory.

“We retain our high conviction towards Employment Hero’s strategy and outlook,” says Bassat.

“We look forward to continuing our partnership with Ben and working with KKR to help Employment Hero realise its full potential.”

SEEK plans to allocate the proceeds of the sale to reduce debt.

The sale announcement came ahead of SEEK reporting a sluggish earnings performance in the first half of FY25 as revenue fell 4 per cent to $536.2 million and underlying profit as measured by EBITDA fell 9 per cent to $223.9 million.

An increase in valuation of the SEEK Growth Fund, led by the improved valuation of Employment Hero, helped boost the company’s bottom line profit to $139.8 million from $29.9 million a year earlier.

“The Growth Fund continues to perform well with look-through revenue growth of 9 per cent while the portfolio valuation increased 5 per cent,” says SEEK’s CEO Ian Narev.

The CEO says that while SEEK’s group revenue for the period was lower due to market volumes, continuing yield growth offset much of the impact.

“Efficiency opportunities, including moving to a simpler more unified organisation structure, meant we could continue high levels of product innovation in priority areas such as AI and trust whilst reducing total expenditure,” he says.

“This led to a significant increase in free cash flow despite the weaker revenue environment.”

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