Earlier this morning, Four Seasons Education (FEDU) priced its 10.1 million ADS IPO at $10, which is the mid-point of the $9-$11 expected price range. Two ADS' equates to one ordinary share. In all, the deal raised roughly $82.4 million in net proceeds. FEDU plans to use the proceeds to expand its learning center network, improve its existing facilities, and develop its educational content and service offerings.
The lead underwriters on the deal were Morgan Stanley, Citigroup, and China Renaissance. Shares are slated to open for trading later this morning on the NYSE.
Four Seasons Education (FEDU) is a China-based provider of math education for elementary students. In fact, it’s the largest after-school math education service provider for elementary school students in Shanghai. Math plays a critical role in shaping logic and reasoning, serves as a foundation for science subjects such as physics and chemistry, and has increasingly diverse applications in the new millennium.
FEDU started its business initially focusing on math education for elementary school students in Shanghai. The company has expanded from a network of 10 learning centers in Shanghai in February 2015 to 33 learning centers in five cities in China today. It offers its programs through its variable interest entities, or VIEs.
Over the years, FEDU says its students have participated in various math competitions and have achieved outstanding results. In the past four International Mathematical Olympiad competitions, all of the Shanghai gold medalists on the China team were FEDU students.
FEDU believes it is the only after-school education institution teaching proprietary math courses in K-12 schools in Shanghai. Following its success in Shanghai where it has the largest market share for its market segment, FEDU has started to expand operations to other cities in China. As of today, FEDU operates six learning centers in four cities outside of Shanghai.
Its programs are primarily focused on math, but have expanded in recent years to also include physics, chemistry, languages and critical thinking. Its proprietary educational content is designed to cultivate students' interest in math and enhance their cognitive and logic abilities. FEDU says its industry reputation has made it a host of choice for leading math competitions.
Taking a quick look at the financials, the company is profitable but quite small. However, it’s growing quickly as revenue in FY17 (Feb) rose 117% to US$30.8 mln. In IHFY18 (Aug), revenue rose 53% YoY to US$22.2 mln. Operating margin is quite good, it was 31.1% and in 1HFY18, it came in at 26.1%.