(Yicai Global) Feb. 19 -- An equity investment firm has agreed to pay USD500 million for a minority stake in TAL Education Group, according to the rapidly growing Chinese K-12 after-school tutoring services provider.
The investor has agreed not to sell the proposed 7 percent stake, involving newly issued class A common shares, for six months after the purchase, the Beijing-based target firm said in a statement, without disclosing the name of the buyer. The transaction is expected to take place this month, it added.
TAL's revenues rose 32 percent to UDS568 million in the third quarter of the fiscal year of 2019, according to an earnings report. The expected price-to-earnings ratio, based on the firm's profit estimate over the next 12 months, exceeds 60.
TAL may face headwinds if its keeps on focusing on online services, according to a report from Bocom International, a Chinese research institute under the Bank of Communications. If the education provider decreases offline capacity, Bocom expects to see pressure on revenue growth because of the low average selling price that the related online business involves.
New York-listed TAL's stock price [NYSE:TAL] closed at USD32.58 on Feb. 15, the latest trading day, while the value of the equity has grown 19-fold since the end of 2012. The company went public in October 2010.
Founded in 2003, TAL runs over 570 learning centers in 36 Chinese cities.
Editor: Emmi Laine