PE-backed Shenzhen Scholar files for Hong Kong IPO

Established in 2011, Shenzhen Scholar claims to be the fastest-growing K-12 tutoring service in southern China based on revenue, providing classes in subjects such as mathematics, Chinese, and English with a focus on middle school, high school, and university entrance exams. The company operates 54 learning centers across four cities in Guangdong and Fujian provinces, with nearly 222,000 students enrolled in the nine months ended September 2018.

Proceeds from the IPO – the size and pricing of which have yet to be announced – will primarily go to expanding Shenzhen Scholar’s learning center network, according to the prospectus. The company plans to open 95 new centers in major cities in Southern China, primarily in Guangdong. Additional proceeds will be used to improve teaching quality, introduce online courses, and renovate existing facilities.

For the year ended December 2017, Shenzhen Scholar’s revenue came to RMB376 million ($55.5 million), up from RMB171 million the year before. Over the same period, net profit grew from RMB10.4 million to RMB35.7 million.

CRE Alliance invested in Shenzhen Scholar last year, committing $40 million for a minority stake. It was the first investment by the PE firm, a joint venture between China Resources Enterprise (CRE) and Great Wall Asset Management. Likewise, CRE Alliance was the first financial investor to take a stake in Shenzhen Scholar, beating several other GPs.

The firm was attracted to Shenzhen Scholar for the opportunity it presented to play a part in China’s after-school education sector, where total revenue is expected to grow from RMB465 billion in 2017 to RMB769 billion in 2022. According to Frost & Sullivan, this growth will be driven by an increase in disposable income among Chinese families, coupled with a strong cultural emphasis on academic excellence and a higher birth rate following the introduction of the two-child policy.

CRE Alliance is led by William Shen, formerly head of Greater China at Headland Capital Partners. The firm is investing from a $500 million US-dollar denominated fund contributed by the two parent companies, and targets investments in the $30-150 million range.

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Save this article  
• Send to  

• Topics
• Greater China
• Consumer
• IPO
• China
• Hong Kong (China)
• Education
• CRE Alliance
• Exit