EduFocal coming to market with $130m IPO
EduFocal Limited, a provider of online study courses co-founded and led by Gordon Swaby, is going public via a sale of shares on the stock exchange, amid plans to resuscitate and grow its bottom line.
The 10-year-old company, based in Kingston, intends to scale its online offerings. Its coming to market at a time when the coronavirus pandemic has been driving up e-commerce, e-services, and schooling and educational activity online, in general, a trend that has brought new business to the company, even while its bottom line is under pressure.
“The improved performance in revenue is explained by the continued growth in our partnership sales and expansion of our offerings,” said EduFocal’s market prospectus posted midweek on the Jamaica Stock Exchange.
EduFocal is targeting equity of $130 million via an initial public offering of shares priced at $1 each. The offer runs from March 3 to 17.
The company plans to use the proceeds to repay short-term loans and invest in product development, and expansion. The proposed initiatives for expansion include improving platform efficiency, developing a range of quality new products and features, and entry into new markets, such as North America.
Since the pandemic, EduFocal’s revenues have more than tripled in a year from $27 million to $102 million. It projects that revenue will triple again this year, hitting $323 million, and then steady at $355 million in 2023.
The company moved from a $7.1 million net loss in 2019 to profit at $11 million in 2020, and back to losses of $1.5 million over nine months in 2021. The forecast sees the company’s profit ballooning to $50.9 million in 2022 and $69.4 million in 2023.
“This is primarily due to the projected growth in revenues of 15 per cent on a constant annual growth rate during the period, as the company executes its strategies, which are expected to be driven mainly by an increase in e-commerce,” stated the prospectus.
EduFocal’s capital was estimated at $56.6 million up to September 2021, mainly in the form of preference shares. This compared to negative equity of $2.2 million a year earlier.
Through its technology platform, EduFocal said that since 2012 it’s done business with more than 100,000 parents, helping to prepare their children for the Grade Six Achievement Test and now its replacement, the Primary Exit Profile. The courses are based on the Ministry of Education’s curriculum, developed by qualified educators.
“We retain ownership of all content developed on the platform,” the company said.
Under the IPO, EduFocal will increase its shares from 518.7 million to 648.4 million. Of those shares, the existing shareholders will hold 80 per cent, and the general public 12.4 per cent.
Through Okgosh Limited, Swaby will hold 36 per cent of the company after the IPO, followed by Widebase Limited, an entity controlled by Mayberry Investments Limited, with 13 per cent, and Matrix Ventures Limited, an entity controlled by EduFocal co-founder and chief technology officer Paul Allen, with 8.6 per cent.
EduFocal will list on the junior stock market once it achieves its IPO target, or, at a minimum, raise $100 million in the offer.
“EduFocal is a young company which operates in a fast-developing space. I am confident that the total addressable market for the company is growing and will continue to grow,” said EduFocal Chairman Peter Levy.
“That does not mean that stakeholders should expect performance to be a smooth, straight line up. There will inevitably be stops and starts, and significant periods of volatility in terms of both financial performance and stock price movement,” said Levy, who is also the head of one of Jamaica’s top insurance companies, BCIC.