Hillhouse Hikes Stake In Chinese K-12 Tutoring Firm After $500M Deal


TAL Education Group, a Chinese after-school tutoring services provider, announced on February 18 that it has sold about US$500 million of newly-issued Class A common shares to a long-term equity investment firm, which makes the investor hold approximately 7% of its outstanding shares.

The Beijing-based K-12 students oriented company said in a statement that the transaction is expected to take place this month. The investor, who was not named in the statement, has agreed not to sell, transfer or dispose of any shares acquired in the transaction for six months after the closing.

Asia-focused investment management firm Hillhouse Capital Group, the investor behind some of China’s tech juggernauts like Tencent and e-commerce firm JD.com, is reported to be the investor of the deal, according to sources cited by Chinese tech-focused news portal 36Kr in a report published on late Tuesday. TAL was listed on the New York stock exchange in October 2010.

The share purchase represents the latest investment secured by a series of online education companies in China. Chinese online education platform Zhangmen raised a US$350 million series E1 round of financing led by CMC Capital Partners and CICC Alpha in January.

Its homegrown peer DaDa also completed a US$255 million series D round of financing led by Warburg Pincus in the same month. In October 2018, SoftBank Vision Fund was reportedly seeking to invest about US$500 million in China’s online education platform Zuoyebang, eyeing the country’s rapidly expanding internet education market.

New Oriental Education & Technology Group, one of TAL’s major competitors in China, established a RMB1.5 billion (US$220 million) industrial fund in August 2018, in an attempt to seize the initiative in the Chinese online education market.

 

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