The traditional domestic education sector is undergoing vital reform via the combination of the Internet and offline education resources, experts said Sunday after a China-based online education company conducted an IPO in the U.S.
China Online Education Group (51Talk), a Beijing-based online English language education platform, announced Friday that it priced its IPO of 2.4 million American depositary shares at $19, within the range of $18-20, to raise $45.6 million.
"We believe that online education is just like e-commerce, in that it's a 'winner-take-all' market. We will promote our brand after getting listed and are not worried about competition," Huang Jiajia, CEO of 51Talk, was quoted as saying in a report by the 21st Century Business Herald on Saturday.
51Talk marks China's first online education enterprise to seek a U.S. IPO, and it got listed on the New York Stock Exchange (NYSE) under the symbol COE.
Morgan Stanley and Credit Suisse acted as lead managers on the deal.
Trading on Friday opened at $19.5 per share and ended at $18.98.
"As the first Chinese online education platform that got listed in the U.S., 51Talk has captured much attention from sectors like education, the Internet as well as the capital market," said Zhu Zhu, an industry analyst at the market research firm Analysys International.
Zhu told the Global Times on Sunday that 51Talk wanted to be the first to got listed since more domestic online education firms are planning IPOs, including the NYSE-listed New Oriental Education and Technology Group's online platform koolearn.com and vipabc.com, a subsidiary of iTutorGroup, a leading English-language learning institute.
Although 51Talk successfully got listed, the language training platform will face many challenges because its financing condition will become more open and transparent to the public, Zhu said.
"The company is expected to turn from a loss to a profit via highlighting its service quality instead of launching price wars with its domestic rivals," she noted.
The net loss of 51Talk reached 99.3 million yuan ($15.13 million) in the first quarter of 2016, an increase of 85 percent year-on-year, pedaily.cn said in May
Moreover, in a bid to deal with challenges ahead, 51Talk needs to resolve its cash flow problems and become less reliant on external capital to support its operations, iTutorGroup told the Global Times Sunday.
Although facing difficulties, the platform's IPO is encouraging for the domestic online education industry that is going through a preliminary development stage and holds sound prospect in the future, noted experts.
China's online education sector raised 99.8 billion yuan in funding in 2014, up 18.9 percent year-on-year, according to a report released by Beijing-based market consultancy iResearch in January.
The online education industry had about 72.27 million users in 2015, and will see 20 percent growth starting from 2016, with the sector to possibly exceed 200 billion yuan by the end of 2018, said the iResearch report.
