Chinese Vocational Training Platform Fenbi Applies for Hong Kong IPO

Fenbi, a Chinese education platform geared towards aspiring teachers and civil servants, submitted an application for a public listing to the Hong Kong Stock Exchange (HKEx) on Monday. The new funds from a potential IPO will reportedly be implemented to enrich course content, expand student groups, strengthen R&D and other purposes.

According to its prospectus, the Beijing-based company opened business in 2013, mainly engaged in adult vocational education services. Starting from online livestreaming and recorded online training courses, the company later launched offline training in May 2020.

The revenue of Fenbi in 2019, 2020, and the first nine months in 2021 was 1.16 billion ($184 million), 2.13 billion and 2.63 billion respectively. The firm achieved an adjusted net profit in 2019 totaling 175 million yuan. However, its net loss in 2020 was 363 million yuan, expanding to 782 million yuan in losses from January to September 2021.

Online training, offline training and teaching materials represent Fenbi’s three core revenue sources, although the proportion of revenue from online channels has been decreasing year by year.

The company’s online training revenue in 2019, 2020, and the first nine months in 2021 was 657.4 million yuan, 986.2 million yuan and 993.3 million yuan respectively, accounting for 56.7%, 46.2% and 37.7% of overall income respectively. Across the same period, revenue from offline training services accounted for 30.5%, 41.6% and 49.8% respectively.

Fenbi noted in its prospectus that “significant costs have been spent to support offline courses, thus affecting short-term business performance.”

The online and offline businesses of Fenbi have developed a cooperative relationship. In 2021, about 67.5% of paid students in offline courses originated from paid online services. As of December 31, 2021, the firm’s online platform had accumulated 45.3 million online paid users and over 1.7 million offline paid users.

Ahead of the IPO, Fenbi CEO Zhang Xiaolong holds a total of 35.33% of equity in the firm. Tencent, IDG Capital, Matrix Partners and Hillhouse Capital each hold 14.13%, 11.95%, 7.21% and 6.02% of equity, respectively.

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Vocational education and training in China can be divided into academic and non-academic sectors, while the latter includes vocational examination training and technical training. According to a report by Frost & Sullivan, the market size of China’s vocational education and training industry will reach 1.11 trillion yuan in 2026. Within this, the market size of the country’s vocational examination and training industry totaled 64.6 billion yuan in 2020, and expected to reach 123 billion yuan in 2026.