Leader Education, one of China's largest private higher education providers in terms of admissions, is aiming to raise up to $70 million through an initial public offering (IPO) in Hong Kong. The company, which operates mostly in China's northeastern Heilongjiang, is set to kick off its share sale sometime next week.
According to sources familiar with the transaction, Leader Education is aiming to be listed on the Hong Kong exchange's board in August. For now, the company is still busy marketing its IPO to institutional investors. Leader Education has tapped Huatai International to be the sole sponsor for the IPO.
Similar to other education-related firms, Leader Education's operations were severely affected by the spread of the coronavirus. However, the company believes that the pandemic should have a limited impact on its finances over the next school years.
In response to concerns over its shift to online classes in light of the pandemic, the company stated that it had successfully implemented online remedies to avoid disruptions in its operations. In its filing, Leader Education stated that it does not expect to refund tuition fees due to the closing of its facilities as it has been able to render continued educational services to its students online.
Leader Education mainly operates its Heilongjiang College of Business and Technology in Harbin, the capital of Heilongjiang. The school offers 24 different undergraduate courses including economics, engineering, arts and business management.
In its preliminary listing filing, Leader Education stated that it generates around 90 percent of its revenues from tuition fees, with the remaining 10 percent coming from boarding charges. For its school year 2019-2020, the company managed to hit an admission quota of 2,800 students. This was a significant jump from the 2,219 admissions it reported for its 2016-2017 school year.
For 2019, the company reported a net profit of 70.36 million yuan or roughly $10.1 million from revenues of around 138.21 million yuan. This was a 23 percent increase from the 57.15 million in profits from revenues of around 117.49 million yuan it reported in 2018.
Leader Education will be the third major Chinese university operator to list its shares in Hong Kong this year. The first two companies that had listed in the city were Gench Education, which floated its shares in January, and Cathay Media Education, which listed in July. The trading performances of the two stocks have remained mixed. Since its listing in January, Cathay Media's stock prices have declined by 10.6 percent. Meanwhile, Shanghai Gench Education's shares have surged by 18.1 percent since its listing in July.
