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.