China continues clamping down on its private education sector
Nov 16, 2018 (China Knowledge) - Listed companies in China’s private education sector have plummeted today after the country’s government slapped additional curbs in the market to rein in its rapidly growing private education market.
China’s State Council has announced that private kindergartens have been banned from seeking public listings either independently or as part of a portfolio. The announcement also said that profit-making kindergartens are also banned from raising funds from listed companies either through cash injection or equity issuance to reduce profit-seeking behavior.
The new regulations come as a response towards the large inflows of private funds flowing into China’s private education market. The country’s private education sector is expected to hit USD 713 billion by 2020 increasing by nearly 40% from USD 417 billion.
Education-related startups raised USD 2.26 billion worth of funds from private equity and venture capital funds last year, increasing by 13.3% YoY with 15 education firms being listed in Hong Kong and U.S.
Shares of the country’s leading private school operators have tumbled with China Maple Leaf Educational Systems, Wisdom Education International Holdings and China Yuhua Education falling by 18%, 16.4% and 15.1% respectively. All these companies are listed on the Hong Kong Stock Exchange.