Investors who poured billions of dollars into Chinese tutoring start-ups as recently as seven months ago are exploring how to claw back their capital after China introduced sweeping restrictions that will destroy the bulk of the companies’ value.
Yuanfudao and Zuoyebang, two high-profile education companies, had a combined valuation of more than $25bn before authorities unveiled a sweeping crackdown on their businesses last month. The pair have raised about $4bn and $3bn respectively from investors including SoftBank’s Vision Fund, Tiger Global, DST Global, Tencent and Singapore’s GIC and Temasek investment funds in recent years.
Some of the funds are in talks with advisers to get their capital back from the companies in the wake of the regulatory action, which effectively banned the after-school tutoring sector, according to people familiar with the matter.