China’s First High-School Education Group raises $75m in New York IPO

First High-School Education Group, which operates private high schools and offers tutoring services in China, has gone public on the New York Stock Exchange (NYSE) on March 11, 2021. Source: First High-School Education Group

First High-School Education Group, which operates private high schools and offers tutoring services in China, raised $75 million in an initial public offering (IPO) on the New York Stock Exchange (NYSE) on Thursday.

The firm, which claims to be the biggest operator of private high schools in western China, has sold 7.5 million American Depositary Shares (ADS) at a price of $10 apiece in the IPO offering. At the midpoint of its proposed range of $9.5 to $10.5, First High-School Education Group commanded a market value of $289 million.

Ruihai Chuangfeng, a wholly-owned subsidiary of Haier Financial Leasing, invested an additional $4.5 million in a concurrent private placement alongside the IPO. Haier Financial Leasing is a unit of Chinese home appliance firm Haier Group.

The listing came two months after it had filed a prospectus with the US Securities and Exchange Commission (SEC) for an IPO and set a placeholder amount of $100 million.

Based in southwestern China’s Kunming City, Yunan Province, First High-School Education Group was founded in 2012 as a provider of after-school tutoring services. The firm has since developed into a network of 19 schools, all of which are located in western China, offering 14 high school programmes, seven middle-school programmes, and four tutorial school programmes as of September 30, 2020.

It has collaborated with local governments and other third parties in China and expects to launch two new schools offering high school programmes in September 2021.

The firm’s IPO in the US comes as the total revenues generated by China’s private high school education industry are estimated to increase from 51 billion yuan in 2019 to 160 billion yuan ($24.7 billion) in 2024. The penetration rate of private high schools in China in terms of student enrollment is expected to hit 22% in 2024, according to a CIC report.

Driven by growing demand for high-quality education resources in China’s landlocked western region, the firm has experienced a compound annual growth rate (CAGR) of 77.3% in terms of high school student enrollment and a CAGR of 41.4% in terms of the number of high schools in the four years ended December 31, 2019, according to the prospectus.

Its revenues were 216.4 million yuan and 282.3 million yuan ($43.7 million) in the nine months ended September 30, 2019 and 2020, respectively. The firm’s adjusted net income was 16.3 million yuan and 33.9 million yuan ($5.2 million) during the same period in 2019 and 2020, respectively.

A major part of the IPO proceeds will be used to build new schools and pursue strategic acquisitions and investments. The firm also plans to use part of the money for recruiting & training teachers, upgrading standardised curriculum, and investing in teaching methodology research.

Shares of First High-School Education Group are listed under the symbol “FHS.” The Benchmark Company, Tiger Brokers, Valuable Capital, Fosun Hani Securities, TF International, AMTD Global Markets, Maxim Group LLC, and Boustead Securities served as the joint bookrunners for the deal.

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In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.