China East Education raises $625 million in world's biggest education IPO: sources

HONG KONG (Reuters) - Vocational training company China East Education Holdings Ltd has priced its Hong Kong initial public offering within the upper half of its targeted range, raising $625 million in the world’s largest education float, two sources said.

The company raised $625 million by selling 435.8 million primary shares at HK$11.25 each - within the upper half of an indicative range of HK$9.8 to HK$12.26, two people with direct knowledge of the matter said.

The pricing values the company at $3.13 billion and represents a multiple of about 22.3 times its estimated 2019 earnings, one of the people said.

China East Education, based in the eastern provincial capital of Hefei, is due to begin trading in Hong Kong on June 12.

China East Education declined to comment. The sources declined to be identified as they were not authorised to speak on the matter.

The IPO surpasses the $490 million float of U.S.-based Laureate Education on Nasdaq in 2017, the largest education-related IPO to date, according to data from Refinitiv.

It also marks a pick-up in listings in the Asian financial hub, which is lagging far behind its rival U.S. exchanges in terms of capital-raising with just $5.9 billion to its credit as of May, compared with the combined $26.9 billion raised by Nasdaq and the New York Stock Exchange.

If a standard 15% “greenshoe” or over-allotment option of the base offering is exercised, that would bring the deal size of China East Education to $719 million.

Hong Kong-based Anatole Investment Management is the sole cornerstone investor, committing $35 million.

The company operated 145 schools specialising in culinary, information technology and auto services across the country at the end of 2018, according to its IPO prospectus.

Last year, it had 123,957 enrolled students and reported a profit of 510 million yuan ($73.8 million), a decline of 20.5% from a year earlier.

The company plans to use the proceeds of the IPO to acquire land and construction facilities, set up new schools in selected markets and establish new majors.

BNP Paribas is the sponsor for the float. Along with the French bank, CICC and Haitong Securities are joint global coordinators.

Reporting by Julie Zhu; Editing by Jennifer Hughes and Stephen Coates