(CapitalWatch, Nov. 2, New York) Jianzhi Education Technology, a Chinese professional training company, has filed for a $50 million initial public offering in New York.
After China's massive crackdown on K-12 tutoring that pretty much killed the wildly growing market, the spotlight shines on professional education providers. This takes place especially as President Xi has called to increase the nation's quality workforce and talent training.
Jianzhi calls itself "a leading provider of digital educational content in China," citing market research by Frost & Sullivan. It was the seventh largest in the country with 1.1% market share in terms of revenue for digital content provided to higher education schools – and the largest online career training services provider for higher education schools with a market share of 65.5% in 2020.
Among the favorable factors, Jianzhi noted the policies encouraging talent development and the growth of the online education market during the Covid-19 outbreak. As of June, it counted 5,500 hours of video courses, of which 71.5% were self-developed, according to the prospectus. It sells courses to online learning platforms, public libraries, and video websites, as well as compiles video learning packages to be sold through China Telecom, China Unicom, and WeChat.
Last year, Jianzhi booked $62.7 million in revenue, a 13% increase from 2019, on $13.5 million in net income. In the half-year through June 2021, revenue was $42.8 million and income reached $6.8 million.
The proceeds from the IPO will fund the development and acquisition of new educational content, R&D on technology capabilities, sales and marketing, and customer service improvement.
Jianzhi Education Technology Group Co. Ltd. operates through a Beijing-based variable interest entity (VIE) in China, Beijing Sentu Technology Co. Ltd. This, in itself, may be a risk for the stock should China find VIE structure "non-compliant with the restrictions on direct foreign investment in the relevant industries."
Underwriters on the IPO are AMTD and Loop Capital Markets.
Jianzhi hopes to become publicly traded on the Nasdaq Global Select Market under the symbol "JZ."