First Capital Securities Limited (“First Capital Securities”), a wholly-owned subsidiary of China First Capital Group Limited (“CFCG” or the “Group”; stock code: 1269), is a joint bookrunner and joint lead manager of the IPO of China New Higher Education Group Limited (“New Higher Education Group”; stock code: 2001). This is the third time First Capital Securities provides underwriting service to private education shares in the year, following the cooperation with Yuhua Education (stock code: 6169) and Minsheng Education (stock code: 1569).
A total of approximately 286,000,000 Shares will be offered under the global offering of New Higher Education Group with the offer price in the range of HK$2.56 to HK$3.22, raising the most up to approximately HK$922 million. The Hong Kong public offer will open from 5 April to 10 April 2017, and trading of the shares is expected to commence on the Main Board of the Hong Kong Stock Exchange on 19 April 2017. BNP Paribas Securities (Asia) Limited is the sole sponsor of the exercise and the joint bookrunners and joint lead managers included BNP Paribas Securities (Asia) Limited, CCB International Capital Limited, CLSA Limited, China International Capital Corporation Hong Kong Securities Limited, First Capital Securities Limited and Haitong International Securities Group Limited.
New Higher Education Group is a leading private formal higher education group in China. It specialises in providing higher education in applied sciences and has over 12 years of experience in operation and teaching. Currently, it operates the Yunnan Technology and Business University and Guizhou Technology and Business Institute in Southwest China. It is also investing in the Harbin Huade University and Science and Technology College of Hubei Minzu University in Northeast China and Central China. As at the end of December 2016, it had a total of 33,462 enrolled students.
At a roadshow luncheon, Mr. Li Xiaoxuan, founder and Chairman of New Higher Education Group, pointed out that China’s private higher education industry has been growing rapidly powered by four main engines: climbing household income, rising demand for higher education and talent with practical experience and relevant skills, enhancing teaching quality offered by private higher education institutions, and favourable central and local government policies. Looking ahead, New Higher Education Group will continue to actively expand business and its school network and optimise its revenue sources and other income generators to achieve the goal of boosting profitability.
In recent years, the disposable income of Chinese citizens has been increasing plus the government implementing the “Two Child Policy” and parents spending more and more on their children’s education are the main forces behind the expansion of the education market. Following the amendment of private education laws and regulations in the PRC, private capital has become more involved in the private education industry that typically boasts ample liquidity and stable and remarkable rate of return. The popularity of education shares in the capital market is also evident in the Hong Kong stock market. In the first quarter of 2017, three private education enterprises – Wisdom Education (the largest high-end private primary and secondary education group in Southern China), Yuhua Education (the largest provider of private education, kindergarten to university, in China) and Minsheng Education (one of the top 10 leading private providers of higher education in China) – were listed in Hong Kong. Since listing, share prices of these companies have outperformed that of the Hang Seng Index.
|Education enterprises listed during the year||Listing date||Performance since listing||Performance of Hang Seng Index in the same period|
|Wisdom Education||26 January||+18.82%||+5.26%|
|Yuhua Education||28 February||+23.41%||+1.41%|
|Minsheng Education||22 March||+0.72%||-1.35%|
*As at closing on 3 April 2017
In fact, education shares have become a new favourite in the Hong Kong stock market since the beginning of the year. Apart from the abovementioned three new stocks, the share price of most of the listed education companies have been climbing:
|Stock name (stock code)||Year-to-date|
|Maple Leaf Educational (1317)||+14.79%|
|Oriental University City (8067)||+10.28%|
|Goldway Education (8160)||+3.70%|
|Dadi Education (8417)||+264.71%|
*As at closing on 3 April 2017
Ms. Flora Wan, Chief Operating Officer of First Capital Securities, expects PRC private education enterprises to continue to seek listing in Hong Kong. Standing right at the forefront of the education investment industry, First Capital Securities has taken part in underwriting the listing projects of three education enterprises including New Higher Education Group the latest. The trend of private education enterprises seeking listing in Hong Kong will prevail. Hence, in the future, First Capital Securities will actively undertake fundraising exercises of education companies and work in alignment with CFCG’s strategy to develop financial services for the education sector, with a view of bringing lucrative returns to investors.