Primavera-backed Chinese education player targets US IPO

The company’s filing does not specify the size or pricing of the offering. It does confirm that Primavera, which invested $90 million in August 2017, is the largest non-management shareholder with a 13.2% stake. Chinese test preparation provider New Oriental Education & Technology, which is already listed in the US, has 1.1%. Peng Ou, co-founder and chairman of Sunlands, holds 45.3% and will remain the controlling shareholder post-offering.

Founded in 2003 as an offline, classroom-based education business, Sunlands switched to an exclusively online model in 2014. It offers various degree and diploma-oriented post-secondary courses as well as courses that help students prepare for professional certification examinations. The company uses a proprietary knowledge management system to customize notes for teachers and develop course outlines and quiz banks.

China’s post-secondary and professional education market was worth RMB197.8 billion ($31 billion) in 2017 and is expected to surpass RMB355.2 billion by 2022, according to iResearch Consulting. The online segment is projected to grow from RMB33.6 billion to RMB130.1 billion. Most post-secondary education demand is for programs tailored to the Self-taught Higher Education Examination (STE).

Sunlands had 382,805 registered students in 2016, up from 205,806 the previous year, while new student enrolments rose from 179,171 to 188,733 over the same period. Revenue increased 163.4% year-on-year to reach RMB418.9 million in 2016, while the company’s net loss narrowed from RMB318.3 million to RMB253.6 million.

Sunlands is set to become the fourth US listing in six months by a private equity-backed Chinese education business, following Rise Education, RYB Education, and Four Seasons Education. New investment activity in the space is also robust. Last November, Primavera participated in the acquisition of WorldStrides, a US-based provider of study-abroad programs for high school and university students, with a view to supporting expansion in China.

The private equity firm backed Sunlands through its second US dollar-denominated fund, which closed at $1.93 billion in December 2016. Primavera is currently targeting $2.8 billion for Fund III.

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• Topics
• Greater China
• IPO
• Consumer
• China
• Education
• Primavera