A China-based online education firm has filed for a New York initial public offering at a time when Beijing is seeking to rein in the country’s booming ed tech sector with a series of stringent new curbs.

Spark Education has made public plans to list its American depositary shares, representing Class A ordinary shares, on the Nasdaq stock exchange in a flotation that could raise up to $100 million.

The organisation, incorporated in the Cayman Islands ad led by its founder, chairman and chief executive Jian (Mark) Luo, provides online tuition and education services.

Spark Education’s intention to IPO comes amid a regulatory clampdown in China, where authorities in recent months have introduced a host of new laws and rules that have wiped billions of dollars from the market capitalisations of listed online tutoring providers. Investors are worried that China’s move to tighten its grip on the sector, which has been boosted by Covid-19, could stifle the robust revenue growth witness among tuition providers in recent years.

Spark Education has said it intends to use around 40% of proceeds from its IPO to enhance its pedagogy, courseware, educational content and to broader course offerings.

Meanwhile, around 30% of proceeds will be deployed to improve technology infrastructure, and the remaining funds will be spent on marketing and branding efforts, as well as working capital and other general corporate purposes.

Date published: 23 June 2021

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