Dec. 20 (NBD) -- China's ELT (English learning training) firm Meten International Education Group ("Meten") is now trying to make a debut on the U.S. stock market through merging with a Nasdaq-listed firm, after its dream to seek an independent IPO went shattered.

The document Meten filed Tuesday with the U.S. Securities and Exchange Commission ("SEC") disclosed that the company and its digital platform Likeshuo entered into a definitive merger agreement on December 12 with EdtechX Holdings Acquisition Corp ("EdtechX", NASDAQ:EDTX), a London-based special purpose acquisition company in the education industry.

Photo/Shetuwang

The combined entity will operate as Meten EdtechX, which will be listed on Nasdaq and focus on providing English training for Chinese students and young professionals, said the document.

The transaction will close in the first quarter of 2020. Upon the completion, Meten EdtechX is expected to raise up to 100 million U.S. dollars and have an initial fully diluted enterprise value of 614 million U.S. dollars.

National Business Daily (NBD) noticed that back to this May, Meten filed for an IPO with the SEC, intending to raise 200 million U.S. dollars but later narrowed down the fundraising scale to 100 million U.S. dollars.

Founded in 2006 and headquartered in Shenzhen, Meten mainly engages in adult ELT. According to a report from global research company Frost & Sullivan, in terms of revenue in 2018, Meten was the second largest player in China's offline ELT market and ranked first in the country's offline adult ELT market.

It's noticed that the number of students enrolled in Meten increased by a whopping 112.1 percent from 2016 to 2018. However, as student base enlarged, the business performance of the company was not proportionally outstanding. 

The prospectus showed Meten recorded revenues of around 801.5 million yuan, 1.15 billion yuan and 1.42 billion yuan respectively in 2016, 2017 and 2018, with the growth rate going downward year by year. The company posted 315 million yuan in revenue in the first quarter of 2019.

Moreover, the course withdrawal rate also displayed an ascending trend, standing at 6.9 percent, 9.1 percent and 10.2 percent, respectively in 2016, 2017 and 2018.

NBD observed that plenty of education companies had sought IPO overseas this year, including Youdao Inc. (NYSE:DAO), GSX Techedu Inc. (NYSE:GSX), Koolearn Technology Holding Limited (01797.HK).

A research institute of securities firm Guangzheng Hang Seng predicted that the trend of education companies going public on the overseas stock markets will last for a short period of time, and more top education companies will tend to acquire small players for expansion in the following 2-3 years.

It's worth noting that the ELT market in China is expected to post a compound annual growth rate of close to 22 percent during the forecast period of 2018-2022, according to the latest market research report by Technavio.

Email: gaohan@nbd.com.cn