GSX Offers 15 Million ADSs; Stock Tumbles 7%

The offering is from an undisclosed selling shareholder and GSX will not receive the proceeds of the sale.

CapitalWatch Staff
    Nov 19, 2019 1:00 PM  PT
GSX Offers 15 Million ADSs; Stock Tumbles 7%
author: CapitalWatch Staff   

GSX Techedu Inc. (NYSE: GSX) has launched a public offering of 15 million of its American depositary shares, sending its stock down more than 7% in New York to $15.50 per share on Tuesday.

The company announced in a statement after markets closed on Monday that the ADSs for sale are offered by a selling shareholder and GSX will not gain the proceeds of the deal.

Underwriting the offering are Credit Suisse Securities (USA) LLC, Goldman Sachs (Asia) LLC, BofA Securities Inc. and Deutsche Bank Securities Inc., according to the filing with the U.S. Securities and Exchange Commission.

GSX did not disclose the identity of the selling shareholder.

Among the company's largest shareholders are Ebetter International Group Ltd., operated by Larry Xiangdong Chen, the founder, chairman and chief executive officer of GSX. He owns 73.3 million ordinary shares in GSX, or 46.7%, according to the Nov.18 filing with the SEC.

Next on the list are Origin Beyond Ltd., holding 20 million ordinary shares, a trust whose beneficiaries are certain employees of GSX, and Huai Yuan Group Ltd., with 9.7 million shares in GSX. Huai Yuan is owned by Huaiting Zhang, former director of the board of GSX and currently its vice president. Zhang previously served as a senior manager at Baidu Online Network Technology (Beijing) Co. Ltd. Banyan Partners Fund II L.P. held 9.4 million ordinary shares, the filing stated. Every three ADSs represent two of Class A ordinary shares of the company.

GSX, a Beijing-based provider of after-school tutoring, became publicly traded in New York in June, raising $208 million in its IPO. It issued 19.8 million ADSs at $10.50 each. Since then, the company enjoyed a steady trading run, in contrast to a number of newly-U.S.-listed Chinese stocks. Its peak was $17.54 per ADS.

Earlier this month, GSX posted 462% year-over-year revenue growth to 557 million yuan for the third quarter. Net income rose to 1.9 million yuan compared with 700,000 yuan a year ago, the company reported.