China adult online education platform raises $41m in US IPO

It is one of the first Chinese companies to successfully price an offering on a US exchange since the apparent resolution of a longstanding regulatory dispute between the two countries. In mid-December, US regulators announced that they had gained full access to the audits of Chinese companies that trade on US bourses. This caused the threat of enforced delisting to recede.

QuantaSing, which is backed by K2VC, DCM Ventures, GGV Capital, Prospect Avenue Capital (PAC), and Qiming Venture Partners, submitted its draft registration statement in September. The final registration statement was filed on December 20, several days after the regulatory announcement.

The company sold 3.25m American Depository Shares (ADS) at USD 12.50 apiece, which represents the mid-point of the indicative range. The stock closed at USD 12.52 on January 25, its first day of trading, and has since tracked a fairly narrow range. It closed at USD 12.60 on January 27, giving QuantaSing a market capitalisation of approximately USD 694m.

Erwan was founded in 2017 and launched a string of live broadcasts and podcasts covering areas such as insurance, investment funds, and listed securities. As of January 2021 – when the company disclosed it had raised nearly USD 100m across Series D and E rounds, led by PAC and New Oriental Education & Technology Group-owned Xianzhi Capital – there were more than 10m users.

The spinout of QuantaSing was completed in anticipation on the US IPO, according to a prospectus. It effectively separated the online education and enterprise services operations from various wealth management businesses, including an insurance broking unit.

QuantaSing claims to be the largest online player in China’s adult learning market for personal interest courses. It began offering financial literacy services in 2019 under the Qiniu brand – building a 36.9% market share in that segment as of 2021 – and then expanded into other areas such as short video production, Chinese painting, personal well-being, and electronic keyboard in August 2021.

A marketing services business aimed at financial intermediaries was launched in 2020 and an enterprise talent management unit – that provides talent assessment and training services to corporate customers – was added last year.

As of November 2022, the company had 75.1m registered users, up from 17m in June 2021. For the 12 months ended June 2022, there were 1.1m paying learners, compared to 800,000 a year earlier. Qiniu remains the largest brand with 59.7m registered users and 1m paying users.

Revenue for the 12 months ended June 2022 came to CNY 2.87bn, up from CNY 1.76bn a year earlier. Over the same period, the company’s net loss narrowed from CNY 316m to CNY 233.4m.

K2VC and DCM were the earliest investors, having led a round in 2017, according to AVCJ Research. They hold stakes of 14.6% and 17.3%, although the dual-class share structure means their voting power is substantially lower. DCM re-upped in a 2018 round that also featured GGV and Qiming. GGV owns 7.2% and Qiming has 7.6%. PAC also holds 7.6%.

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• Topics
• Greater China
• Technology
• Financials
• IPO
• China
• Education
• Qiming Venture Partners
• GGV Capital
• K2VC
• DCM-Doll Capital Management