BEIJING/HONG KONG (Reuters) – Chinese online education platform Yuanfudao is set to raise $1.2 billion in a new funding round which will value it at about $13 billion, according to two people with direct knowledge of the issue.
Yuanfudao’s existing investors, Tencent Holdings (0700.HK), Hillhouse Capital and Boyu Capital, will invest in this round, according to the people. The three are vying for a leading role in the fundraising with Tencent being the frontrunner, one of them said.
The eight-year-old company has nearly doubled its valuation within six months. In March, Yuanfudao raised $1 billion that valued it at $7.8 billion.
The company is planning to raise more fresh capital to include new investors in the near term at a different valuation, said one of the people, who declined to be identified as the information is confidential.
Yuanfudao and Boyu declined to comment. Tencent and Hillhouse did not immediately respond to requests for comment.
Yuanfudao’s valuation surge comes as investors increase their bets on China’s online education sector, which saw a surge of interest after the coronavirus outbreak triggered a migration to online classes.
Start-ups targeting K-12 education have been particularly popular, which raised 12.5 billion yuan in the first half, over 60% of the total amount raised by the sector, according to Chinese research firm IT Orange.
Online tutoring startup Zuoyebang in June raised $750 million in a fresh funding round, led by investment firms FountainVest Partners and Tiger Global Management
Technology-driven education services provider GSX Techedu (GSX.N) has seen its share price more than triple this year, while shares of TAL Education Group (TAL.N), which runs several online learning platforms, are up more than 50%.
Yuanfudao, which says it has accumulated 400 million users and has 11 teaching and curriculum development centers across China, also counts IDG Capital, Warburg Pincus and Matrix Partners China among its backers.
Reporting by Yingzhi Yang in Beijing and Kane Wu in Hong Kong; Editing by Brenda Goh and Robert Birsel