KKR commits $70m to China education player Tarena
KKR has invested $70 million in Tarena International, a provider of professional education and training in China, forming a new partnership with a PE backer as existing investors trim their holdings.
The deal, which comes 14 months after the company listed in the US, saw KKR acquire 6.8 million shares while Tarena founder and CEO Shaoyun Han picked up a further two million for $20.5 million, according to a release. Han's purchase means he becomes the single largest shareholder, with 16.2 million shares.
The sellers are IDG Capital Partners and Goldman Sachs, which prior to the transaction held 6.7 million and 10.9 million shares in Tarena, respectively. Each firm retains half of its original stake. IDG invested in Tarena's 2003 Series A round and in its 2008 Series B round before part exiting in the company's IPO last year; Goldman committed $19.9 million in 2011.
KKR made its investment through its China Growth Fund. A person familiar with the deal said the firm was attracted by Tarena's impressive growth rate compared to the IT training sector as a whole. It anticipates further expansion due to the continuing need for technology professionals to upgrade their skills.
KKR will focus on operational improvements by leveraging its experience with educational investments in other parts of the world.
Founded in 2002, Tarena provides educational services to professionals through a combination of in-person classes, live online tutorial, and online modules. It targets professionals and graduates of lower-tier universities who want additional training to advance their careers, particularly in IT. The company claims to have trained over 200,000 students, and that its graduates earn up to 25% more than professionals of comparable educational attainment.
Tarena went public in April 2014, selling 15.3 million American Depository Shares at $9.00 apiece to raise $137.7 million. Its share price has been volatile since then, falling as low as $6.70 in the weeks immediately following the IPO. It rebounded to $14.45 in August 2014 before falling again to $9.66 in April of this year.
Since April the stock has climbed again, reaching $13.49 on June 22.
Tarena reported revenues of $136.2 million in 2014, up from $98.2 million the previous year. Net income came to $24.7 million, compared to $14 million in 2013.
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