This Week's IPO: New Oriental Education & Technology

There is one IPO on deck for this week, China-based English education company New Oriental Education & Technology (EDU). This is considerably earlier than most IPOs have historically been priced (two weeks after Labor day). According to a Red Herring interview with Renaissance Capital's Robert Bard, the rush to go public results from new legislation in China that will make it more difficult for companies to raise capital overseas after September 8th.

Highlights from EDU's prospectus can be found here. Offering details (from the most recent F1 filing):

Business:

We are the largest provider of private educational services in China based on the number of program offerings, total student enrollments and geographic presence. We offer a wide range of educational programs, services and products consisting primarily of English and other foreign language training, test preparation courses for major admissions and assessment tests in the United States, the PRC and Commonwealth countries, primary and secondary school education, development and distribution of educational content, software and other technology, and online education. We provide educational services under our “New Oriental” brand, which is the best brand in China’s English language education market according to a report published in June 2005 by the Social Survey Institute of China, or SSIC, a leading social survey and research firm in China.

Offering: 7.5 million ADSs at an offering price of $11-13. At mid-range, the company expects net proceeds to be $80.7 million, or $93.3 million if the underwriters exercise their overallotment option.

Use of Proceeds: $18.5 million will go towards repaying debt, and $20 million to expand the company's network of schools and improve infrastructure.

Red Herring notes that this year's Chinese and Taiwanese IPOs were not well received on Wall Street. China GrenTech (GRRF), which manufactures RF wireless products for the Chinese market, raised $112.5 million at the end of March (see Seeking Alpha commentary on the IPO), pricing at $18 (above the $16 high end of the range) however the stock subsequently dropped to almost half of the IPO value, and closed last week at $9.75. Himax (HIMX), a flat panel display company, also priced at the end of March, raising $468 million (see Seeking Alpha IPO analysis), after pricing at $9, the high end of its range. The company hit a low of $4.73 in June, and closed Friday at $7.19.

GRRF, HIMX Post IPO Performance