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China tech

Chinese online learning startup GSX seeks $220m US listing

Company joins wave of education group IPOs from mainland

Beijing-based online learning platform GSX filed on Wednesday with the U.S. Securities and Exchange Commission for a listing on the New York Stock Exchange.   © Reuters

NEW YORK -- Chinese online learning platform GSX Techedu filed for a U.S. initial public offering on Wednesday, looking to raise up to $220 million as the company aims to capture more of the private tutoring market back home, where parents see education as paramount.

The Beijing-based company, founded in 2014 by the former executive president of U.S.-listed group New Oriental Education and Technology, seeks to list on the New York Stock Exchange. The filing follows two Chinese unicorn listings on the Nasdaq last week, which together raised $300 million.

Previously operating as an online platform connecting tutors and students, GSX pivoted in 2017 to providing live online lessons to large classes, according to its prospectus. The company achieved profitability in 2018, reporting a net income of $5 million on $40 million in revenue generated from course fees. Over 70% of GSX's revenue comes from K-12 courses, though the platform also provides foreign language, professional and fitness classes.

China will be home to nearly 300 million online learners by 2020, Guangzhou-based iiMedia Research forecasts. The industry's gross billings quadrupled over the past few years to surpass $20 billion in 2018 and appear likely to top $100 billion by 2023, according to Frost & Sullivan market research commissioned by GSX.

In its prospectus, GSX said it will use proceeds from the offering to improve the learning experience, develop content and recruit high-quality teaching staff.

At least three Chinese online education companies went public in the U.S. last year. Sunlands Online Education Group, OneSmart International Education Group and LAIX have a combined market capitalization exceeding $2 billion.

GSX also will have to compete with New Oriental, the biggest name in China's private tutoring market. That company boasts a $14 billion market capitalization on the New York Stock Exchange and also provides online classes.

Up-and-coming players in China's K-12 education tech space also include VIPKid, a platform connecting English tutors to students, which raised $500 million in Series D financing last year at a valuation of $3 billion.

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