Puxin, a Beijing-based K-12 after-school tutoring services provider, has priced its initial public offering at $17 per American Depositary Shares (ADS) for a total offering size of $122.4 on the New York Stock Exchange (NYSE).
According to its SEC filing, Puxin is offering 7.2 million ADS, with each ADS representing two ordinary shares of the company, for a total of $122.4 million.
The underwriters have an option to purchase up to an aggregate of 1.08 million additional ADSs from the company at the IPO price, less underwriting discounts and commissions.
On its first day of trading last Friday, Puxin opened at $17 a share and jumped above $21 per share on closing.
The total offering size, however, was lower than what the company had initially planned to raise. In its draft document in May, Puxin said it was raising up to $300 million.
Puxi, trading under the stock symbol NEW, said it intends to use 70 per cent of the proceeds to finance potential strategic acquisitions and launch new schools in China while 15 per cent will go to upgrading IT systems and promoting online platforms.
About 10 per cent of the proceeds will be used for marketing and brand promotion while the remaining amount will fund working capital and other general corporate purposes.
Puxin was founded in 2014 and booked $248 million in sales for the 12 months ended March 31, 2018. It reported a $63 million net loss on $204 million in revenue for 2017.
Since its inception, Puxin said, it had acquired 48 schools and built a nationwide network of 397 learning centers across 35 cities in China as of March 31, 2018.
Its total student enrolment increased 180.4 per cent from 454,945 in 2016 to 12.75 lakh in 2017, representing the fastest growth among major after-school education service providers in China.
China’s after-school education market is fast-growing. Its market size reached Rmb483.4 billion ($75.8 billion) in 2017 and is expected to grow substantially to Rmb805 billion ($126 billion) in 2022, according to a Frost & Sullivan report.
At the same time, this market is highly fragmented and competitive, Puxin said in the filing. According to the Frost & Sullivan report, as of December 31, 2017, there were over 100,000 K-12 after-school tutoring service providers in China, among which the top five players had less than 4% market share in 2017 in terms of revenue.
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