Chinese K-12 Online Tutoring Platform GSX Techedu Files For US IPO

Beijing-based K-12 online tutoring services provider GSX Techedu has filed with the US Securities and Exchange Commission for an IPO to raise capital for content development and talent recruitment.

In a heavily redacted filing, GSX mentions a placeholder amount of $220 million. It did not specify the number of American depositary shares that it intends to offer in the IPO.

The Chinese firm, which claims to be the country’s third-largest online K-12 after-school tutoring service provider, plans to trade on the New York Stock Exchange under the symbol GSX. The company has roped in Credit Suisse, Deutsche Bank, Barclays, and CLSA as underwriters.

GSX was founded in June 2014 as Beijing BaijiaHulian Technology Co and was renamed in January this year. It posted revenue of $59.2 million and a loss of $2.9 million in 2018.

“We intend to use the net proceeds from this offering for improving students’ learning experience and educational content development, recruiting high-quality teaching staff, improving our technology infrastructure, marketing and brand promotions, as well as working capital and other general corporate purposes,” the company said in its filing.

GSX’s K-12 courses cover primary and secondary grades. It also offers foreign language, professional, and interest courses. The company adopts an online live large-class format to deliver its courses, which it believes is “the most effect and scalable model” to disseminate scarce high-quality teaching resources to aspiring students in China.

As of March 31, 2019, GSX Techedu had 169 instructors and 522 tutors.

The average enrollments of GSX’s online K-12 courses increased from approximately 400 per course in 2017 to approximately 600 per course in 2018, and from approximately 440 per course for the three months ended March 31, 2018, to approximately 980 per course for the same period in 2019.

“There is significant imbalance of education resources between urban and more remote areas in China. The strong demand for high-quality education resources nationwide drives the growth of online K-12 large-class after-school tutoring market in China,” the company said, citing a study conducted by Frost & Sullivan.

According to the study, China’s online K-12 large-class after-school tutoring market is still at an early development stage but it is already more consolidated than the offline market.

Admission to quality schools and universities has created demand for K-12 after-school tutoring in China, the report added. Online K-12 after-school tutoring courses are generally divided into large-class, small-class, and one-on-one class formats.

In May last year, Beijing-based K-12 after-school tutoring services provider Puxin raised $122.4 million in its IPO on the New York Stock Exchange. The company offered 7.2 million ADS at $17 apiece.

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