Chinese education startup Siwei Zaowu Information Technology has filed for an initial public offering (IPO) at the Shenzhen Stock Exchange’s Nasdaq-style ChiNext board, aiming to raise RMB 1.04 billion (USD 152.41 million) which will bring the company’s valuation to RMB 4 billion (USD 586.18 million), according to the firm’s prospectus filed with the bourse on Friday.
Founded in 2014 by Luo Zhenyu, host of popular online talk show Luoji Siwei (or “Logic Mind” in Chinese), Siwei Zaowu position itself as a company providing “lifelong education services.” The company initially planned to get listed on the Shanghai Exchange’s STAR Market, but shifted its target to the ChinNext Market in April, due to “ChiNext’s registration-based IPO reform, and based on the firm’s businesses.”
Siwei Zaowu has three business lines—online classes, offline knowledge-centered services, and e-commerce.
Through the Dedao app, which was launched in 2016, Siwei Zaowu offers a variety of online classes in categories such as arts, businesses, marketing, humanities, social sciences, and others. On the app, users can also have access to audible books and ebooks, while they can share their insights and comments on the platform’s online community.
As of March 31, Dedao garnered over 3.5 million monthly active users (MAUs), while the number of registered users reached 21.35 million. Last year, the average revenue per paying user (ARPPU) was RMB 231.93 (USD 33.99), compared to RMB 203.81 (USD 29.87) in 2017.
The firm also manages the Dedao University, which regularly opens online and offline classes targeting professionals from different sectors, such as tech, entertainment, transportation, education, and municipal affairs, among others. The firm has built classrooms in 11 cities including Beijing, Shanghai, Shenzhen, and Guangzhou, and has over 7,000 enrolled students in 85 classes.
Siwei Zaowu has also expanded to the e-commerce field. On the Dedao app, users can buy Dedao e-readers, original books, and third-party copyright-owned books. By the end of the first quarter, the firm sold 16,000 e-readers and published 26 original books.
“As Chinese adults have higher demand in improving their own abilities and the society has better recognition of the concept of ‘lifelong education,’ the industry is growing rapidly,” the firm wrote on its prospectus.
Per stats from Chinese consulting firm research, cited by Dedao in the prospectus, the market volume of the lifetime education industry reached RMB 82 billion (USD 12.02 billion) in 2019, with a year-on-year growth of 18.3%, while the figure is estimated to hit 149 billion (USD 21.84 billion) by 2023.
Siwei Zaowu generated annual revenues of RMB 556 million (USD 81.48 million) in 2019, and 192 million (USD 28.14 million) in this year’s first quarter ended on March 31. The company also reported net incomes of RMB 115 million in 2019 and RMB 13 million in the last quarter.
In the previous five rounds of financing, the firm raked in over RMB 1.2 billion, counting investments from Shunwei Capital, Sequoia Capital, Zhen Fund, and China Renaissance. Luo is the biggest shareholder and will keep a post-IPO stake of 22.8%, according to the prospectus.
The firm’s main competitors in the industry are business-focused online course platform Hundun University, culture-centered education platform Shidian Dushu, and question and answer Quora-like platform Zhihu, which also offers paid classes.
