China-based tutoring app developer Yuanfudao is near to raising funding round at a $7.5bn valuation, in a round co-led internet group Tencent, Reuters reported today, citing two people familiar with the matter.
Investment manager Hillhouse Capital is expected to co-lead the round. Yuanfudao had targeted $1bn when it launched fundraising efforts in January this year but Reuters reports that a target amount has not yet been finalised.
A spokeswoman for Yuanfudao told Reuters its information concerning the valuation and deal timing were “not accurate” but declined to clarify.
Founded in 2012, Yuanfudao offers online courses, homework assistance and mock exams to primary and secondary school students through an ecosystem of mobile apps, and has built up a base of more than 400 million registered users.
The round is thought to almost exclusively consist of existing backers, in order to reduce due diligence and accelerate completion. It comes amidst the Covid-19 pandemic that has forced countries including China to close schools, making the need for home tutoring more acute.
While not an existing shareholder, Hillhouse Capital had been in constant discussions with Yuanfudao ahead of the round, one of Reuters’ sources said.
Yuanfudao has raised approximately $503m in funding prior to the upcoming round. Tencent led a $300m round in late 2018 that also featured Warburg Pincus, Matrix Partners China and IDG Capital at a valuation of more than $3bn.
Tencent also took part in a $120m round for the company in 2017 that was led by Warburg Pincus. The corporate had provided $40m in funding for Yuanfudao the year before.
Yuanfudao had previously closed a $60m series D round in 2015 that was co-led by Tencent and CMC Capital Partners with backing from New Horizon Capital and existing investors Matrix Partners China and IDG Capital.
