Tencent challenger NetEase (NTES: NASDAQ) is seeking an IPO for its education application YouDao (有道); the online-education platform is expecting to raise over USD 300 million, with a USD 2 billion market capitalization, Bloomberg says.
Netease, Chinese Internet behemoth, represents the second tier ecosystem companies that dominate China's online world behind the massive Tencent, Alibaba and Baidu.
The company engages in several operations from gaming to music streaming and owns numerous companies that have been incubated by the parent company, including, among others, YouDao.
NetEase subsidiary YouDao was launched as a search engine in 2005, and now it is mainly being used as a search engine for English online education and translation services by around 420 million Monthly Active Users (MAU), according to the analytics from one of the Chinese App intelligence platforms YiGuan (易观).
Yet, the online dictionary vanguard does not seem to be content with the prolific China market, as it had announced job openings for "India Market Marketing Officers" on Linkedin. "YouDao has several Indian employees, who run the company's operations there," people familiar with the matter said.
In 2018, China's K12 education market hit CNY 44 billion and expected to jump CNY 150 million in 2022, according to iResearch. The same report estimated around 134 million users who engage in online education activities, putting the industry an appealing stream of revenue for China's internet heavyweights. (Find out more about ByteDance's education hardware initiative)
NetEase has not commented on the rumours yet, however, it is a company known for successfully incubating, breeding and producing brand-new companies out of its ecosystem.
NetEase has expanded its operations so wide that it has even initiated the e-commerce branches, specifically NetEase Kaola (网易考拉) and NetEase Yeation (网易严选).
NetEase has not yet commented on the IPO rumours, however, the CEO Ding Lei signalled that the company may pivot its core business to education. "Education will be the main direction of NetEase's business," he said.