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Financials

UPDATE 4-TAL Education shares rise 50 pct in NYSE debut

* Shares end 50 percent above IPO price

* Sold 12 million ADS for $10 each in IPO

* Trading on New York Stock Exchange under symbol XRS (Updates with closing share price)

NEW YORK, Oct 20 (Reuters) - Shares of Chinese tutoring company TAL Education Group XRS.N closed 50 percent above their IPO price in their stock market debut on Wednesday as investors bet on growth and strong financials.

The shares opened at $14 and rose as high as $15.74 on the New York Stock Exchange before closing at $15.

The company on Tuesday sold 12 million American Depositary Shares for $10 each, raising about $120 million. It had planned to sell shares for $8 to $10 each.

TAL Education provides afterschool tutoring from kindergarten through grade 12 in subjects such as mathematics, English, Chinese, physics, chemistry and biology.

Chinese companies have been good for investors in a bleak U.S. IPO market. Three of the five top-performing offerings of the past 12 months are Chinese, according to Connecticut-based IPO research house Renaissance Capital.

Education-related IPOs have also been well-received, said Ben Holmes, an IPO analyst and founder of Morningnotes.com. Over the past two years only one of the eight education-related IPOs has closed below its IPO price on the first day of trading, he said.

TAL served 382,505 students in the fiscal year ended Feb. 28. The company had a 0.26 percent market share in China and 4.5 percent market share in Beijing in 2009. It said the after-school tutoring market is highly fragmented.

“It’s a fragmented market, so even with a 4.5 percent share in Beijing we are the leading player,” Chief Financial Officer Joseph Kauffman said in an interview.

“It’s a huge market. K-12 tutoring in 2010 was about a $34 billion market and we expect it to be a $66 billion market by 2014,” Kauffman said.

Kauffman added that the company expects to raise its market share to 10 percent to 12 percent in some markets. He said Beijing would be a likely candidate, but declined to say when this might happen. He said the company plans to add more learning centers in cities where it already has a presence -- Beijing, Shanghai, Shenzhen, Guangzhou, Tianjin and Wuhan.

“They have shown an ability to expand their market share in metropolitan areas and I think they can replicate that,” said Francis Gaskins, president of IPOdesktop.com.

TAL Education’s net revenue grew 61 percent from a year earlier to $53 million in the six months that ended on Aug. 31. Net income attributable to common shareholders grew 41 percent to $13.2 million in the same period.

Credit Suisse and Morgan Stanley led the underwriters on the IPO. The shares are trading on the New York Stock Exchange under the symbol “XRS.” (Reporting by Clare Baldwin; Editing by Gerald E. McCormick, Robert MacMillan and Richard Chang)

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