Ascendent-backed RYB Education files for US IPO
RYB Education, a Chinese kindergarten operator in which Ascendent Capital holds a substantial minority stake, has filed for an IPO on the New York Stock Exchange.
A filing made by the company indicates it will raise up to $100 million but gives no detail as to the precise size and pricing of the offering. Ascendent holds a 46.4% stake in RYB while co-founders Yanlai Shi and Chimin Cao - who serve as CEO and chairman, respectively - own a majority interest in the company.
This represents the first investment from the private equity firm’s second fund, which closed in June 2015 at the hard cap of $600 million. Ascendent subscribed to secured redeemable notes with a principal value of $51.7 million in November 2015. In doing so, it took out several early-stage investors. According to AVCJ Research, previous backers of the company include GGV Capital.
Founded in 1998, RYB claims to be the largest early childhood education provider in China by revenue. As of June, its network comprised 80 directly-owned and 175 franchised kindergartens across 130 cities and towns. The directly-owned facilities alone had more than 20,000 enrolled students.
RYB also had 853 play-and-learn centers aimed at pre-kindergarten age children – most of which are franchised out – and it sells a variety of teaching aids, educational toys, and at-home-education products.
According to Frost & Sullivan, three-quarters of pre-school age children attended kindergartens in China last year. It is on course to reach approximately 85% by 2020, with private operators expected to benefit from favorable government policies and parent preference. The private kindergarten market is project to be worth RMB298.4 billion ($45.3 billion) by 2021, up from RMB147 billion in 2016.
Over the same period, play-and-learn center revenue is set to rise from RMB128.6 billion to RMB271 billion, while the early childhood at-home education market grows from RMB20.8 billion to RMB48.1 billion.
RYB generated $108.5 million in revenue last year, up from $82.9 million in 2015. Net income came to $5.9 million in 2016 compared to a loss of $1.3 million the previous year.
Credit Suisse, China International Capital Corp. and Morgan Stanley are underwriting the company’s IPO.
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