Ascendent-backed RYB Education gains 40% on US debut

A total of 7.8 million American Depository Shares (ADS) were sold for $18.50 apiece, according to a filing. Underwriters can buy up to 1.17 additional shares by exercising the overallotment option. The offering included 2.3 million shares held by Ascendent, generating proceeds of $42.6 million for the GP. RYB’s stock opened at $24.12 on September 17 and ended the day at $25.90.

Ascendent subscribed to secured redeemable notes with a principal value of $51.7 million in November 2015. The was the first investment from its second fund, which closed in June 2015 at the hard cap of $600 million. The GP took out several early-stage investors. According to AVCJ Research, previous backers of the company include GGV Capital.

Ascendent held a 46.9% stake in RYB prior to the offering. Following the partial exit and the dilution effect of the new share issue, it now owns 29.9%. RYB’s co-founders, Chimin Cao and Yanlai Shi – who serve as chairman and CEO, respectively – hold 37% between them. Due to the dual share structure, Ascendent and the co-founders together have 88.1% of the voting power.

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 and educational toys.

According to Frost & Sullivan, 75% 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.

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• Topics
• Greater China
• IPO
• Consumer
• China
• Education
• Exit
• Ascendent Capital