IELTS listed calm overnight PE industry to find new profit model highlights

Reporter Hu Yu reporting from Beijing



In recent days, confirmed the company headquarters in Beijing Global IELTS has been in the market quiet period, but the education industry is not excited by this news, this is the year New Oriental, is insurance companies to market distance education due to the strong market response contrast. From 2006 to 2008 education industry after the first round of investment boom, investment in education industry in 2009 dropped cases, low water continues today. Part of the investment agency said it is not because of the economic crisis, but by the education industry characteristics such as return on investment due to a long cycle; plus the rapid development of the domestic education market, the growing segmentation, investors will be more cautious, only to find there unique business model and the endurance-based company will invest.



VC cautious



"This year we expect there will be no investment boom there, because from 2006 to 2008 the first round of the domestic private sector investment boom of the effect of education has not yet fully apparent, the education sector is not an immediate return on investment is often a long cycle." Paul is director of Distance Education Group adaptation to two of the long reporter said.



This is protection in the largest network of educational institutions in the domestic market of 2008, the education sector from the investment were disclosed in 33 cases, involving an amount of up to 4.229 billion U.S. dollars. And in 2009, this set of data reduced to 8 from 644 million U.S. dollars investment cases and the amount of investment into the education market, the amount of venture capital reduced by about 85%.



In response, investors respond to the "normal."



Li Yue, vice president of Renaissance, said investment in education industry has become the momentum of steady, cautious, only in 2007 venture performance in all areas are very brave, but also the number of projects to the education industry.



"Education should not be hot and cold market investments, investment fluctuations and market fluctuations are not directly related to anti-seasonal fluctuations in the characteristics of the industry is small." Bertelsmann CEO of China Dragon Yu told this reporter .



Reporter noted that, although the scale of investment decline, but the education sector is still thriving in the economic crisis. According to statistics, venture capital into the education sector accounted for about 20% -30%.



Long Yu introduction, education, industry demand is rigid, the investment will be long-term bullish on this market sector. But education is not as IT, new energy, as there spurt of investment and development, blowout-style development only in exceptional special period the country will appear. "Today, the financing of individual companies listed will not bring the whole industry, the market excited, practitioners will have to interpret these new developments and digestion. This market matured, will maintain a smooth and stable long-term."



So far, focusing on the Asia-Pacific education market, Bertelsmann invested sector is security of investment is not shot after another.



Caution is also from the domestic enterprises in some special problems of education.



Adaptation to two told reporters that the number of businesses into the education industry a lot, but very few large scale, especially in some small private educational institutions also could not find a profit model. Education industry seems to be simple, in fact, a very high threshold, require high investment and the return cycle is long, difficult for many companies persevered. If it is to do online education, but also to the high technical requirements, the threshold will heightening competition.



"Many of the domestic private educational institutions, family-oriented enterprises, employing uneven quality, so not only managers to maintain and hard, but also his ability to adopt an open an open mind, whether it be good at absorbing new nutrition from the outside world." Long Yu said investors value the management team is the hope of this sunrise industry in the education selected to true endurance athlete.



But even the wind get to vote, how the money has become a major problem.



"Many companies die not because of lack of money, but because of too much money." Sequoia Capital China, said Liu Xing, vice president, corporate mentality should adjust the financing side, not how to prove that they are doing well, but does in the development process are needed financial support.



"Paul is the first time to get venture is mainly used in a technical update and improve the teaching level. Public financing to get the money, we are brought more reserves to meet contingencies, or for purchase. "adaptation to two introduction, is Paul in the listing, the fee income has been enough daily business expenses.



Long Yu said, in fact, the overwhelming majority of education institutions, including many small businesses are profitable, but the main problem lies in the smooth process of development and growth to achieve multi-regional scale operation. So far, the industry would be difficult to replicate the success of new enterprises to the east, is Paul's pattern.



Adaptation to two also said that even if the complete listing of enterprises, it is only the initial success, to achieve the magnitude of the scale is still long way to go. "With foreign high fees, do different degree education market environment, China's private education institutions adopted a more low-cost, universal education strategy, which requires company size large enough to support long-term operation."



Two types of the most sought after business model



In fact, appear in the investment market, the domestic listing of private educational institutions lineup has been a miracle.



Following the September 2006 after the listing of New Oriental, in October 2007 to July 2008 of just less than one year, there have been Noah, Philip into education, ATA is insurance companies and overseas listing of Distance Education. "In foreign countries, very few educational institutions are listed." Lung Yu told reporters.



Public enthusiasm continues. Some time ago, according to Deloitte survey, 80% of the respondents expressed financing needs, and nearly 50% of the respondents are listed intention. China Education and Training 2009, the total market value of about 680 billion yuan, is expected to reach 960 billion yuan in 2012, the annual compound growth rate will reach 12%.



Number of investment institutions head told reporters, remote education and vocational skills training are the two most popular mode of education.



Li Yue said the training institutions is the wind before the start with the largest area of investment, and will be continuing concern. Long Yu said that China has long been linked to traditional education and qualifications, skills and market docking and vocational qualifications lack of education, and the current economic trend for the growing demand for practical education.



Among them, the distance education in India by Softbank Group is a partner of Mr. Bean that the global memory in a huge room for development in the area.



"Distance education is the internet-based educational technology innovation is a new business model." Yue Li said. Wang Qiang, director of Exchange Fund Investment gull that, though there are only about 10% of the entire education sector, but the online educational institutions listed in a short time.



In fact, this investment has seen the wind in 2008. Venture capital market, then the network investment in education was 882 million yuan, accounting for the amount of China's education market financing, 48%; which, vocational training, the network received the largest investment in education, involving a total of 3 to 4 times investment company.



According to statistics, China's Internet education market value accounting profession from 2005 to 800 million yuan to 1.2 billion yuan in 2007, is expected to increase to 2 billion yuan this year. Only is Paul a listing on the first 4 years was 4 times the wind investment.



Moreover, the future of private education market is also likely to be the giant network of business produced distance education.



Distance Education is from the 2005 Paul began merger and acquisitions in the next few years the rapid establishment of the accounting, medicine, law, construction projects in 13 different areas, including more than 170 types of distance education system, counseling, accounting for the online education 70% market share.



"The acquisition plan has been all year to see opportunity and luck." Adaptation to two that are being taken to ensure the merger is the complementary strategy, the market has occupied the area first, to mergers and acquisitions to increase scale advantages; not been occupied in the first area, who are targeting more upper order.



Distance education and in vocational skills training, and some virgin land yet to be reclaimed.



"For example, early childhood 0-6 years of age, knowledge of the domestic market for the past 5 years from the beginning, understanding and mining is still quite shallow, and the faculty is very scarce, and even belong to China's own mainstream models are not yet formed not to mention diverse, and this far away from Europe and the United States. "Lung Yu said investors were looking forward to high-quality companies to fill the market gap.



> Related: Global IELTS into the silence of the proposed financing of the United States market of about 100 million U.S. dollars 100 million U.S. dollars Global IELTS financing plan SAIF NASDAQ + Global Yasiyasi of examination by the Chinese official website Global IELTS number of Softbank Asia SAIF billion investment