NetEase Inc.'s online education arm Youdao plans to offer 5.6 million American depositary shares for its proposed initial public offering, with a price range between US$15 and US$18 per share.
At the midpoint of that range, Youdao estimates it would raise about US$208.5 million in net proceeds from the offering and concurrent private placements, or approximately US$221.3 million if the underwriters exercise their option to purchase additional shares in full.
Concurrently with and subject to the completion of the offering, investment funds managed by NetEase shareholder Orbis Investment Management Ltd. agreed to purchase US$125 million worth of Youdao's class A ordinary shares in private placements. NetEase CEO William Lei Ding also indicated that he is interested in buying up to US$20 million worth of ADSs being offered at Youdao's IPO.
The Chinese company intends to list its American depositary shares, which represents its class A ordinary shares, on the New York Stock Exchange under the symbol DAO.
Youdao plans to use proceeds of the offering to invest in technology and product development, expand branding and marketing efforts, grow its user base and for general corporate purposes.
Founded in 2006, Youdao offers e-learning products and services such as knowledge tools, online courses, smart devices and interactive learning apps. The company reported net revenue of US$106.6 million in 2018, while net losses amounted to US$30.5 million in 2018.
The underwriters for the proposed offering are: Citigroup Global Markets Inc., Morgan Stanley & Co. LLC, Credit Suisse Securities (USA) LLC, China International Capital Corp. Hong Kong Securities Ltd. and HSBC Securities (USA) Inc.