PE-backed Chinese education provider aims for $100m US IPO
Tarena International, a Chinese IT training services provider that counts Goldman Sachs, IDG Capital Partners and Jafco among its investors, is seeking to raise up to $100 million through a NASDAQ IPO.
The size and pricing of the offering have yet to be decided, but the company said in a regulatory filing that the primary purpose of going public is to provide liquidity to shareholders, retain employees by providing equity incentives and obtain additional capital required to expand its business.
Goldman holds a 29% stake in Tarena, IDG has 23.6% and Jafco has 15%. Shaoyan Han, the company's founder, chairman and CEO, and Jianguang Li, a director, between them own 56.8%. They also control the variable interest entities (VIEs) that hold assets to which foreign investors are not allowed to have to direct exposure, although restrictions on professional education services have been relaxed in recent years.
According to AVCJ Research, IDG-managed funds provided Tarena's Series A round in September 2003 and then returned with Jafco - acting through Jafco Asia Technology Fund IV - for the Series B in November 2008.
Goldman invested $19.9 million in September 2011 via Goldman Sachs Investment Partners Master Fund and Goldman Sachs Investment Partners Private Opportunities Holdings.
Tarena claims to be the largest provider of IT professional education services in China, citing IDC research which shows the company had an 8.3% market share by revenues in 2013. It has trained more than 130,000 students since its inception in 2002, cooperated with 500 universities and colleges and placed students with around 35,000 employers.
The company offers a combination of live distance instruction, classroom-based tutoring and online modules. Classroom lectures are delivered in Beijing and shown via webcast to 92 directly operated learning centers in 33 cities nationwide.
Courses are currently offered in nine IT subjects and two non-IT subjects, but Java courses account for the bulk of revenue. Tarena also offers career counseling services.
China's professional education services market - post-secondary education programs focused on professional career advancement - grew from RMB48.8 billion (US$8.1 billion) in 2010 to RMB67.5 billion in 2013. It is projected to reach RMB89.0 billion by 2017. At the same time, the market is highly fragmented.
Tarena's enrollment numbers came to 46,458 in 2013, up from 16,282 in 2011. Revenues rose from $25.7 million to $92.8 million over the same period, while net income went from $700,000 to $14 million.
Goldman Sachs and Credit Suisse are the joint bookrunners for the offering.
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