Investors are recognizing the vast market potential of the rapidly growing education sector in China with Hong Kong-based asset manager Value Partners and Japan's SoftBank Vision Bank pioneering ventures in the industry.
Indeed, the market of China's education sector is expected to flourish to nearly $432 billion in 2020, according to a 2016 report released by Deloitte.
The potential of China's education sector is one of the topics discussed during the inaugural Value Partners Academy event held from Oct. 22 to 24 in Hong Kong. The event, hosted by Value Partners, was attended by various institutional investors.
One key point discussed China's education sector is the shortage in supply of private higher education in the country. Au King Lun, Ceo of Value Partners, said there is a high potential for growth in China's gross enrollment ratio and in tuition as well as boarding fees.
Au separately told CNBC on Oct. 29 that the market is just opened up. In fact, the top six companies leading the sector in China only account for merely 6 percent of the total market.
In July, Value Partners announced a fund entirely dedicated to investments in Mainland China's private higher and vocational education. The firm is aiming for as much as $720 million assets under management.
Au told CNBC that Value Partners recognized the "sustainable" demand coming from the higher education and vocational training.
Kevin Leung, executive director for Hong Kong's Haitong International Securities Company, shared Au's optimism about China's education sector, describing it as "definitely a good growth area." Leung was particularly optimistic by the remarkable willingness of people to pay for education, something that drove growth in the education sector of other countries.
Early in October, Japan's SoftBank Vision Fund said it is seeking to invest about $500 million in China's growing online education market. The fund's eyes are particularly set on education technology startup Zuoyebang, according to people familiar with the matter who spoke with Bloomberg.
Zuoyebang has already raised more than $500 million in funding from Coatue Management, Goldman Sachs Group Inc., Sequoia Capital China, and GGV Capital.
The sector was also the focus at the Stanford China Economic Forum held on Oct. 9. Attendees of the forum recognized the radical growth of China's education system, from early childhood to higher education. The participants said the growth was remarkable since increased learning among the population is a significant step towards overall economic success.
Cindy Mi, founder, and CEO of VIPKID, said more children are expected to attend school since the repeal of Once-Child Policy in 2015.
Yingyi Qian, former dean of the School of Economics and Management at Tsinghua University, noted that there were only about 1 million students enrolled in colleges and universities in 1998 while enrollees currently reached more than 7 million.
