Online education firm prepares to list on NYSE

PUBLISHED : Thursday, 17 July, 2008, 12:00am
UPDATED : Thursday, 17 July, 2008, 12:00am

China Distance Education, a provider of online education and test preparation courses for professionals on the mainland, plans to raise US$96.8 million by listing on the New York Stock Exchange this month.

The company would offer 8.8 million American depositary receipts at between US$9 and US$11 each, sources said. Each ADR represents four ordinary shares.

A formal management roadshow will run from today until July 29, when pricing will be set, according to a sale document sent to fund managers.

Citigroup and Merrill Lynch are advising on the deal.

Three mainland education institutions have sought to list in the United States over the past two years. None has chosen to list in Hong Kong.

'US investors are well aware of their business model but I doubt Asian investors know them well,' said a source. 'They could grab a relatively fair valuation by selling shares in the US market, where investors are keen on them because of their huge business potential.'

Analysts said the English-language training market on the mainland generated 15 billion yuan (HK$17.18 billion) last year, and is expected to double to 30 billion yuan by 2010.

ATA, a provider of computer-based testing and educational programmes on the mainland, raised US$46 million selling shares on the Nasdaq Stock Market in January.

The stock has defied the market slump, closing at US$12.25 on Tuesday - 28.95 per cent above its US$9.50 offer price and compared with a 17.36 per cent drop in the Dow Jones Industrial Average so far this year.

China Distance Education plans to use the proceeds from its offering as working capital and for expansion and for potential acquisitions.

The company's course enrolment totalled 258,000 for the six months to March.

Enrolment doubled to 504,000 in September last year from two years earlier.