17 August 2021
In recent weeks, new regulatory changes to one of China’s hottest sectors, the after-school tutoring segment, has impacted valuations of publicly listed tutoring firms. Seeing a few headlines pop up on our iLex News screens, we took a look into the associated loan markets and lenders to the sector.
A significant portion of Refinitiv-reported lending to the Chinese Education sector is denominated in USD (55% of US$2.36bn cumulative reported volume over the last 5 years), indicating at participation of foreign investors. Looking at the number of reported deals and the deal margin breakdown, we see a large spike of 10 deals in the first half of this year and a trend to higher margins, with the majority of Refinitiv-reported deals since H2 2019 pricing in the 300-500bps and 500-750bps ranges (see chart below).
A list of some of the largest after-school tutoring firms: TAL Education, New Oriental, Rise Education and Youdao Inc. on iLex Borrower Insights provide a breakdown of the reported lenders to these firms – 28 different lenders in the past 5 years. Naturally, mainland Chinese banks in aggregate are the largest investors, but we also see Taiwanese, Swiss, German and Dutch lenders in the list.
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