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Global Education hopes to raise $60.6M in IPO

Thu, 10/07/2010 - 11:05am
The Associated Press

Global Education & Technology Group Ltd., a Chinese test preparation company, expects to raise about $60.6 million in an initial public offering this week, as it hopes investors will bet that Chinese families' rising incomes drives them to increasingly send their children overseas for college.

The IPO would follow several others by Chinese companies that made initial investors a lot of money this fall, including fast-food chain Country Style Cooking Chain Co., Internet company China Cache International Holdings Ltd. and real estate website SouFun Holdings Ltd. Shares of each of those companies are above the offered price.

Global Education expects to sell 6.4 million American depositary shares, each representing four ordinary shares, for between $8.50 to $10.50 each.

It expects net proceeds of $53.4 million if shares price at $9.50 each, which it will use to offer stock as bonuses to employees and for general corporate purposes.

The company expects to begin trading Friday on the Nasdaq exchange under the symbol "GEDU."

Global Education has centers in dozens of cities in China for adults and children. Most of the outlets are operated as franchises. The centers focus on giving English language instruction to Chinese students who want to study at universities outside the country.

The company said the number of Chinese students studying abroad is increasing rapidly, with about 419,000 students going overseas in 2008. Most students head to English-language countries, Global Education said.

The company said it is the leading provider of test prep classes for the International English Language Testing System, which is a popular English-language test used by colleges enrolling international students in the U.K., Australia and other English-speaking countries.

Many universities in the U.S. accept the IELTS exams, although most have traditionally required international students to take the Test of English as a Foreign Language exam, or TOEFL.

Global Education's revenue rose about 50 percent in 2009 to about $36.3 million, while net income available to shareholders fell 10.4 percent to $2.2 million last year.

Credit Suisse and BofA Merrill Lynch are managing the IPO.

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