Zhangmen Education, a China-based after-school tutoring provider backed by internet and telecommunications group SoftBank, has raised $41.7m in an initial public offering on the New York Stock Exchange.
The company priced 3.6 million American depositary shares, each representing nine ordinary shares, at $11.50 each, towards the lower end of the offering’s $11 to $13 range. They closed at $16.65 on the first day of trading on Tuesday.
Founded in 2005, Zhangmen provides access to online tutoring courses for students in China from kindergarten to high school. Its offering includes one-on-one and small-class tutoring for a range of subjects.
The company generated $613m of revenue for 2020 and made a net loss of $154m, having reported a $216m net loss on $383m of revenue the year before. About half of the IPO proceeds will be used to develop and improve its products and services and about 20% to enhance its technology infrastructure.
Zhangmen had raised $1.1bn in equity funding, including a reported $400m series F round in September 2020 backed by SoftBank’s Vision Fund 2, Canada Pension Plan Investment Board, International Finance Corporation (IFC), Genesis Capital and CMC Capital, though the filing states the round actually totalled $355m.
The company had raised $514m across series D and series E rounds in 2018 and 2019 that included IFC, CMC Capital, Warburg Pincus and Genesis Capital, the last of which remains its largest shareholder, with a 15.5% stake post-IPO.
SoftBank’s stake is sized at 5.7%, while Zhangmen’s other notable shareholders include Warburg Pincus (10.2%), Wenwei Entities (7.4%), CMC (6.1%), China Renaissance (5.4%) and the company’s employee stock option vehicle, Dreamax Education II (5.2%).
Morgan Stanley and Credit Suisse Securities (USA) are active joint bookrunners for the offering while Citigroup Global Markets, China International Capital Corporation Hong Kong Securities and Macquarie Capital (USA) are joint bookrunners.
Futu, Tiger Brokers (NZ) and SNB Finance Holdings Limited are co-managers for the IPO. The underwriters have a 30-day option to acquire more than 543,000 additional ADSs, which could increase its size to $48m.