Global Education Stocks - 2021 Half Year Update

Record IPOs meets China’s stock decline. A tale of two stories.

Education Intelligence Unit

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July 23, 2021

The first half of 2021 has been a tale of two stories for global education stocks. A record half of IPOs has been tempered with a record decline in value, driven primarily by China's education giants re-rating under a new regulatory regime. Chinese listings are redirecting from New York to Hong Kong, while the US boasts an unprecedented pipeline of education IPO candidates.

Capital Markets are progressively playing a critical role in driving innovation to support the social and economic objectives of education. As governments struggle to fund education at historic levels and as more learning occurs outside formal systems, private capital is playing an increasing role in funding access and outcomes.

HolonIQ powers the world’s first and leading EdTech Index and ETF and we track the entire global education capital markets universe, now 280 listed education companies in 33 countries, representing over $250 billion of market cap, $80 billion of revenue and over half a million professionals and teachers.

Back in January 2000, only 40 of today’s 280 Education Stocks where listed. Where-as today, we have 52 education companies with over $1 billion in market cap each. These are not EdTech Unicorns by definition, but rather their mostly grown-up listed peers.

In 2000, about 2-4 education companies would IPO each year and in the first half of 2021, 17 education companies IPO’d. Almost every year we see an education company ‘go private’, the majority through private equity buyouts, with a few strategic acquisitions from global players. We expect 100 listed education companies with over $1 billion market cap before 2030, perhaps by 2025 at the rate of IPOs in the first half of 2021, subject of course to the broader market IPO momentum and trends.

Education Stocks have broadly outperformed the market over the past five years. That is, up until the first half of 2021, which has seen our EdTech Index regress back to the same levels as the S&P500 over the same time period.

The HolonIQ Foxberry Education Tech & Digital Learning Index provides exposure to companies that are developing and using digital and lifelong learning technologies, such as personalized and adaptive learning, e-classrooms, OERs, video and gamification, virtual and augmented reality, interactive modules and immersion technologies to redefine how education is accessed, resourced and consumed around the world to deliver positive results for the individual and society. The index follows a purity screened, modified liquidity-based weighting scheme where companies with higher liquidity achieve a larger weight in the index.

LERN is the world’s first education technology ETF, tracking the HolonIQ Foxberry Education Tech & Digital Learning Index and providing investors with exposure to “EdTech” companies that are redefining how education is accessed, resourced and consumed around the world to deliver positive results for the individual and society.

Rebasing the EdTech Index and the S&P500 back to 2015, we can see just how well EdTech has performed compared to the S&P500. The EdTech Index accelerated out of the initial COVID shock but has suffered a massive decline over the past six months, primarily driven by regulatory changes in China which has nearly quartered the value of the three largest global education stocks in New Oriental, Offcn and TAL from their peaks mid February.

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