China Distance Education goes back to IPO school

By all accounts, the educational market in China looks particularly bright -- with favorable demographics and growing wealth. For example, according to the China Statistical Yearbook, there are about 686 million people between the ages five and 39. Plus, the Chinese population living in urban areas has gone from 36.2% in 2000 to 43.9% in 2006.

So, one of the beneficiaries is China Distance Education Holdings Limited (CDE), which offers a range of online education offerings and test prep courses. In fact, the company has recently filed to go public on the New York Stock Exchange (the proposed ticker is "DL").

The primary focus of CDE is on professional categories, such as in accounting, law, healthcare, constructions and so on. The courses include a mix of media, such as audio-video lectures (streamed on the Net), online communities and proprietary content. There are currently 14 websites.

No doubt, CDE has been growing at a rapid rate. From 2005 to 2007, revenues have spiked from $3.8 million to $11.8 million. Net income was $5.4 million.

During this time frame, total course enrollments went from 233,000 to 504,000.

Actually, a few years ago, another Chinese educational provider -- New Oriental Education & Technology Group (NYSE: EDU) – had a successful IPO. The market cap now stands at about $2.3 billion.

The lead underwriters on the CDE IPO include Citi (NYSE: C) and Merrill Lynch & Co. (NYSE: MER). You can also locate the prospectus at the SEC website.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates MergerBook.com.