Lixiang Education Proposes $33 Million U.S. IPO

Lixiang Education Holding (LXEH) intends to raise $33.3 million in an IPO of its American Depositary Shares [ADSs] representing underlying ordinary shares., according to an F-1 registration statement.

Lishui City, China-based Lixiang was founded to develop offline campuses for primary, middle school and high school students featuring government approved curriculum programs.

Management is headed by wife and husband team Ms. Fen Ye, who is founder and Chairlady and her husband, CEO Mr. Biao Wei.

Mr. Wei previously ‘attended a professional program in fashion design at the Zhejiang Institute of Silk Textiles.’

As of September 1, 2019, the company had a total of 4,558 enrolled students and 322 teachers.

Lixiang has received at least $8.7 million from investors including The founder and her husband own 90% of company stock, with two other family members owning the remaining 10% of stock, pre-IPO.

The company has two campuses that it operates for primary and middle school students.

Pursuant to a contractual agreement, it offers high school education through a campus operated by another firm.

Management says it can charge premium pricing due to the organization’s reputation for high quality and continuous investment in teacher education and training.

General and Administrative expenses as a percentage of total revenue have been uneven as revenues have fluctuated.

The General and Administrative efficiency rate, defined as how many dollars of additional new revenue are generated by each dollar of General and Administrative spend, swung to negative (0.1x) in the most recent reporting period.

According to a 2019 market research report by ResearchAndMarkets, the market for Chinese education at all levels is forecast to reach $573 billion by 2023.

This represents a forecast of an impressive CAGR of 11.3% from 2018 to 2023.

The main drivers for this expected growth are an increasing urban population, growing discretionary income,