New Oriental’s Koolearn Online Learning Platform Files for IPO in Hong Kong

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Koolearn Technology Holding Limited, an online education company under New Oriental Education & Technology Group Inc., filed for an initial public offering to the Hong Kong Stock Exchange on July 17.

Established in 2005 by the well-known New Oriental, Koolearn has become a leading online educational services provider in China. It currently has four main online platforms of Koolearn, DFUB, Donut, and Koo, that cover after-school tutoring and test preparation from the pre-school education level to college level.

an overview of the courses offered under each platform
an overview of the courses offered under each platform

The company’s total revenue for the year ended May 31, 2017 was 446.2 billion yuan (about $68 billion). Its flagship product Koolearn was the largest online education brand of college test preparations in 2017 with a market share of 8.2 percent in terms of revenue.

Illustration of China's Education System
Illustration of China’s Education System

According to an F&S Report, China’s education market was at a size of 1,149.6 billion yuan in 2017, and is expected to increase to 1,794.3 billion yuan in 2022 at a compound annual growth rate (CAGR)of 9.3 percent. While the market size of the online after-school tutoring and test preparation market in China is expected to reach 310.2 billion yuan in 2022 from the 2017 figure of 96.4 billion yuan, at a CAGR of 26.3 percent.

Online After-School Tutoring and Test Preparation Students and Growth Rate in China, 2013-2022E
Online After-School Tutoring and Test Preparation Students and Growth Rate in China, 2013-2022E

Koolearn’s largest shareholder is New Oriental which has an ownership of 66.72 percent. It is also backed by Image Frame, a subsidiary of Tencent, who is the second-largest shareholder with 12.06 percent of equity. Koolearn also entered into a strategic partnership with Tencent in 2016 for technological and analytical support of the business.

The money raised from the IPO will be used towards staff recruitment and training, course development, technology infrastructure, etc. The joint sponsors of this deal is Morgan Stanley, Citibank, and China International Capital Corporation.

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