First High-School Education Group Co. Ltd. has filed for an initial public offering in New York worth up to $100 million.
Based in Kunming, Yunnan province, First High-School Education (FHS) is the largest operator of private high schools in western China. In all of China, it is the third-largest in terms of student enrollment, FHS said in its prospectus, citing a report by China Insights Industry Consultancy (CIC).
By 2024, the private high school education industry in China is expected to reach 160 billion yuan, according to CIC. The market research firm also reported that western China has limited access to quality education and that parents are willing to increase spending on schools to ensure their children can pass university entrance exams.
FHS said the percentage of its students admitted into universities was 63.9% in 2020 compared with the 40.5% average for students in western China.
Operating since August 2012, FHS now operates 19 schools and expects to launch at least two more by September 2021. FHS also works with local governments, which provides backing. In addition to high school and middle school programs, it offers tutorial school programs and Chinese-English bilingual programs. As of Sep. 2020, it counted 25,867 students overall.
For the nine months through September 2020, FHS reported $41.6 million in revenue, up 31% year-over-year. Net income increased fourfold to $5 million in the same period, according to the prospectus. For 2019, the company posted $49.6 million in revenue on $4.7 million in income.
FHS expects to use half of the proceeds from its IPO for new schools and strategic acquisitions. It also plans to invest in teachers and technology, as well as lease payments.
Concurrently with the IPO, FHS is to receive $4.5 million from an investor in a private placement, according to the filing. With this investor, Haier Financial Leasing Co. Ltd., FHS has a sale and leaseback contract payable by August 2023. FHS says it operates an asset-light model and leases land for a number of its schools.
FHS has a long list of securers on its offering, including Benchmark Company, AMTD, Tiger Brokers, Valuable Capital, Maxim Group, and Boustead Securities.
The company hopes to become publicly traded on the New York Stock Exchange under the ticker symbol “FHS.”