China-based education software provider 17 Education & Technology Group has floated in the United States in an initial public offering sized at almost $288m that enabled digital media group ByteDance to exit.
The offering involved the company issuing 27.4 million American Depositary Shares (ADSs), each of which represented 40% of an ordinary share, priced at $10.50 each, in the middle of the IPO’s $9.50 to $11.50 range.
Also known as 17Zuoye, 17EdTech combines in-class learning software that utilises data to drive learning and assessment products, in addition to large-class online tutoring services that use artificial intelligence to offer more personalised learning.
The company almost quadrupled its revenue year on year to approximately $119m for the first nine months of 2020, though its net loss rose 26% to $144m in the same period.
About 30% of the IPO proceeds will go to enhancing 17EdTech’s after-school tutoring offering, with roughly 20% each allocated to developing its in-class software and content, boosting its technology infrastructure and bolstering sales and marketing.
ByteDance joined Esta Investments, a vehicle for Singaporean state-owned investment firm Temasek, as well as Citic PE’s CL Lion Investment vehicle, H Capital and Shunwei Capital in a January 2018 round for the company sized at $250m according to the IPO prospectus.
CL Lion Investment added $120m in funding for 17EdTech in June this year, the prospectus stated. It had raised a total of about $135m as of 2015, from DST Global, Temasek, Shunwei Capital, Tiger Management and angel investors Wang Qiang and Xu Xiaoping.
Shunwei Capital is 17EdTech’s largest shareholder, with a 17% stake post-IPO, followed by founder, chairman and CEO Andy Chang Liu (12.4%), H Capital (12.3%), CL Lion (9.8%), Esta Investments (9.4%) and Walden Investments Group (5.4%).
The company is listed on the Nasdaq Global Select Market and its ADSs closed at $12.11 yesterday, valuing it at approximately $2.28bn.
Joint bookrunners Morgan Stanley, Goldman Sachs (Asia) and BofA Securities, co-bookrunner China Renaissance and co-manager Tiger Brokers have a 30-day option to buy another 4.1 million ADSs which would lift the size of the offering to approximately $331m.
