Photo/Shetuwang

Sept. 29 (NBD) -- Youdao, the education tech arm of Chinese internet firm NetEase, plans to submit application for U.S. listing in late September or early October and initiate pre-deal investor education (PDIE) of the initial public offering (IPO) in mid-October, according to media reports.

So far, Youdao hasn't made comment on the issue.

Previous reports have it that Youdao aims to raise at least 300 million U.S. dollars in the U.S. market and Morgan Stanley and Citigroup Inc. would be the major underwriters. The valuation of the education brand stood at 1.12 billion U.S. dollars after it completed its first round of financing last April.

NetEase is seen to adjust its business strategy this year. National Business Daily (NBD) noticed that while taking the game segment as its largest growth engine, the company is shifting more focus from e-commerce to music and education fields. 

The internet giant announced in early September its 2-billion-U.S. dollar deal with Alibaba Group to sell the cross-border retailing platform Kaola to the latter, which indicated NetEase's exit from the e-commerce sector. On the same day, the company's music streaming service NetEase Cloud Music secured 700 million U.S. dollars in the B2 round of financing led by Alibaba Group, deemed as a strong boost to NetEase's deployment in online music.

Early this year, education was for the first time ever included in NetEase's four major strategies. Founded in 2006 and developed into an Internet education brand in 2014, Youdao offers services from online dictionaries to math courses and prep classes for diverse certification-tests.

The company is rapidly expanding its presence in the education domain and becoming a core business of NetEase. Currently it has more than 800 million users in China, with 17 million daily active users. Data shows flagship app Youdao Dictionary has gained 700 million users as of the beginning of this year.

Last year, Youdao's revenue increased by 60 percent year-over-year, and income contributed by K12 business rose by 3 times. In NetEase's earnings conference call for the second quarter of 2019, the online education business maintained strong growth and the average monthly active users topped over 100 million.

If the education tech company completed its IPO, it will be the first unit of NetEase that goes public independently. 

Email: lansuying@nbd.com.cn