Spark Education, a Beijing-headquartered firm providing online education for K-12 students, has filed for an IPO on the Nasdaq, joining the ranks of Chinese e-learning platforms with plans to list in the U.S.
In the prospectus it submitted to the U.S. Securities and Exchange Commission on Monday, Spark Education did not disclose how many American depositary shares (ADSs) it plans to offer, but set a placeholder sum of $100 million. In January, Bloomberg reported that the company aims to raise as much as $500 million in the planned U.S. IPO.
Approximately 40% of the net proceeds from the offering will be used to improve its pedagogy, courseware, educational content and broaden its course offerings, while about 30% will be allocated to improving its technology infrastructure, according to the prospectus. The remainder of the proceeds will be used for marketing, branding and other general corporate purposes.
Founded in 2017, Spark Education primarily offers online small-group math, Chinese and English tutoring classes, with users numbering 370,530 as of March 31, 2021, up from 133,902 a year earlier, according to the prospectus.
In spite of an expanding user base, Spark Education faces the same profitability problem as many other Chinese online tutoring startups. In 2020, the company reported a net loss of 951.7 million yuan ($145.3 million), compared with a 771.1 million yuan loss in 2019, according to the prospectus.
The IPO application comes as domestic regulators have tightened oversight on the online education sector due to complaints about illegal activities such as false advertising and deceptive pricing.
In the prospectus, Spark Education listed the uncertainties in the implementation of, or proposed changes to, the Chinese laws and regulations for the online K-12 after-school tutoring market as a major risk factor.
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