Beijing-based K-12 after-school tutoring services provider Puxin is raising up to $300 million by offering American Depositary Shares (ADS), according to a draft document for an IPO filed at the US Securities and Exchange Commission.
The filing showed that Puxin is planning to float the ADS on the New York Stock Exchange at the end of June or early July. The number of shares to be offered has not been disclosed by Puxin.
Puxin was founded in 2014 and booked $248 million in sales for the 12 months ended March 31, 2018. It reported a $63 million net loss on $204 million in revenue for 2017. The company plans to list on the NYSE under the symbol NEW. Citi, Deutsche Bank, Barclays, Haitong and CICC are the joint bookrunners on the deal.
Since its inception, Puxin said it had acquired 48 schools and built a nationwide network of 397 learning centres across 35 cities in China as of March 31, 2018. Its total student enrolment increased 180.4 per cent from 454,945 in 2016 to 1,275,723 in 2017, representing the fastest growth among major after-school education service providers in China.
Puxin said it intends to use the proceeds from the offering for financing potential strategic acquisitions and launch of new schools in China; for upgrading its information technology systems and promoting online platforms; for marketing and brand promotion; and fund working capital and for other general corporate purposes.
China’s after-school education market is fast-growing. Its market size reached Rmb483.4 billion ($75.8 billion) in 2017 and is expected to grow substantially to Rmb805 billion ($126 billion) in 2022, according to the Frost & Sullivan report.
At the same time, this market is highly fragmented and competitive, Puxin said in the filing.
According to a Frost & Sullivan report, as of December 31, 2017, there were over 100,000 K-12 after-school tutoring service providers in China, among which the top five players had less than 4% market share in 2017 in terms of revenue.
“Many service providers operate limited number of learning centers, often at a loss, and lack the scale or management expertise necessary to invest in curriculum development, instructor training, and technology necessary to improve students’ academic results and attract more students,” Puxin said.
In January, Zhangmen, also a K-12 personalized online tutoring company, completed $120 million Series D round of financing from an affiliate of private equity firm Warburg Pincus and Genesis Capital, a Chinese growth capital fund focused on growth stage Internet companies. It was the sixth round of financing by the company,
Through online and mobile apps of Zhangmen, primary and middle school students from eight to 18 years old can select top teachers who have graduated from China’s first-class universities such as Tsinghua, Peking University, and Fudan, for personalized, one-on-one tutoring sessions, the company said in a statement.
Zhangmen’s total revenue surpassed Rmb1 billion ($157 million) in 2017, the statement added. In June 2017, the company claimed to have become the first online after-school tutoring company to achieve Rmb100 million ($15.7 million) monthly revenue.
Early this month, another Chinese company has also announced plans to raise up to $165 million by offering 15 million ADS. Chinese e-sports video platform Huya Broadcasting plans to trade on the NYSE under ticker HUYA, with Credit Suisse as lead underwriter.
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