China Online Education Files for IPO

China Online Education Group filed an F-1 form with the U.S. Securities and Exchange Commission (SEC) for its initial public offering (IPO). No pricing details were given in the filing, but the offering was valued up to $100 million, although this number is usually just a placeholder. The company has yet to decide on which exchange to list its American depositary shares.

The underwriters for the offering are Morgan Stanley and Credit Suisse.

This is a leading online education platform in China, with core expertise in English education. According to the Frost & Sullivan Report, China Online Education is one of the top online education platforms as measured by gross billings in 2015, and the largest online English education platform in China, as measured by gross billings in 2015 and the number of available foreign teachers as of December 31, 2015.

In the filing, China Online Education gave its mission as follows:

Our mission is to make quality education accessible and affordable. Recognizing the strong demand for improving English proficiency and the lack of effective and affordable solutions in China, our founders started with English education as the first step of our journey.

English education in China traditionally focuses on test preparation instead of improving English proficiency, especially English communication skills. To address this unmet need, this company has developed proprietary online and mobile education platforms that enable students across China to take one-on-one live interactive English lessons with overseas foreign teachers, on demand, fostering the development of all aspects of English proficiency. China Online Education employs student and teacher feedback and data analytics to deliver a personalized learning experience. The lessons are highly affordable, with each 25-minute lesson on average costing roughly $5.

The company connects its students with a large pool of highly qualified foreign teachers that it has assembled using a sharing economy approach. Once these teachers have gone through a rigorous selection and training process, the company gives them the flexibility to deliver lessons based on their own scheduling availability, at appropriate locations of their choice, and get paid based on the number of lessons taught. This sharing economy approach has allowed the company to quickly build a large team of teachers in a cost-effective manner. This platform analyzes teachers’ teaching aptitudes, feedback and rating from students and background and recommends suitable teachers to students according to their respective characteristics and learning objectives.

China Online Education plans to use the net proceeds from offering primarily for general corporate purposes.

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