EastBridge Investment Corp (OTC-BB: EBIG), a financial services company focused on high-growth companies in Asia, offering IPOs, Joint Ventures and merchant banking services, with clients similar to companies like China Education Alliance, Inc. (NYSE: CEU) and Green Agriculture, Inc. (NYSE: CGA), is nearing launch of the IPO for Tsingda eEDU which will directly impact EBIG shareholders in a positive manner and is worthy of a closer examination.
By being a major force behind taking Tsingda eEDU public, EastBridge and subsequently EBIG shareholders will reap rewards. Per the agreement between EastBridge and Tsingda, EastBridge will hold a 10 to 20 percent stake in the new public company and will be passing 1 to 2 percent of the overall holdings to the shareholders of EBIG. In simpler terms, EastBridge intends to dividend, on a pro-rata basis, up to 300,000 ordinary shares of Tsingda stock to shareholders of EastBridge, as soon as Tsingda’s stock starts trading and they are approved by FINRA. All shareholders on record on March 15, 2010, are eligible for this dividend. To date, Tsingda has received approval on two registration filings with the SEC and is presently waiting for the third and final approval.
Planned Success for Tsingda is Success for EastBridge
Some people may look at the roll EastBridge played in the IPO as merely a vehicle for Tsingda to achieve public status and performance of a job for EastBridge, but that is taking a far too simplistic rationale as to the overall picture. By taking a stake in Tsingda, this is an investment for EastBridge and, as with any good investment, due diligence was performed to maximize odds of future success and increased revenue and value for all involved.
Tsingda eEDU has a strong foothold within the Peoples Republic of China (PRC) as a major presence in the online education industry. Tsingda Education, with its subsidiary Tsingda Network, is a leading provider of online educational services in the PRC, offering classes through pre-recorded lessons and in real-time via its Tsingda Vitrual Internet Classroom. Tsingda runs the largest chain of learning centers in China in terms of the number of learning centers, known as “Tsingda Learning Centers” which target elementary school students and consist mainly of franchised locations. As of December 31, 2010, there were 2,346 Tsingda Learning Centers across China, which includes 21 Company-owned and 2,325 franchised learning centers. Tsingda has also developed a robust, interactive educational platform which allows students to search and subscribe to virtual classrooms offered by a wide range of teachers in the PRC. Students may choose to access courses via one of the learning centers, home or any other location that has a computer with internet access.
Growth Potential for Tsingda
While Tsingda does indeed have a relatively short operating history (company was formed in 2006), the burgeoning into a revenue-generating machine really began over the last few years with Tsingda realizing annual growth rate of sales revenue from 2008 to 2009 and 2009 to 2010 of approximately 101% and 87%, respectively. Recent totals reported for fiscal year 2010 were highlighted by Tsingda generating $27,447,545 in gross revenues.
The Peoples Republic of China represents approximately one quarter of the global population. Calculations based on information published by the PRC government, places the target population market for Tsingda clients at approximately 360 million individuals comprised of: infants and children below school age six (160 million); primary school students (110 million); junior high school students (60 million); and senior high school students (30 million). Although seeing success and increasing number of clients, Tsingda has still only scratched the surface of the market potential.
Tsingda’s business strategies are aligned to generate revenue through many avenues including franchise fees and programs purchased by end users which can generate cash on multiple occasions. For example, because pre-recorded courses where purchased by different students over and over, the 6,869 courses were actually purchased an aggregate of 7,176,115 times through December 31, 2010.
All in All a Solid Deal
When evaluating any business agreement, a closer look is required to get a true grip on the breadth of the arrangement. In the case of EastBridge and Tsingda, the contract was to bring Tsingda forth as a public entity, but a keen investor will take a look at all components to make an educated evaluation regarding potential, as that is the foundation of developmental companies and what the future may hold. In the case of EBIG shareholders, the reward is twice as sweet as EastBridge will hold a significant amount of shares of Tsingda which may increase the value of EastBridge on its own in addition to the fact that shares of the soon-to-be-public Tsingda eEDU will be showing up in their own portfolio.
Interested parties are encouraged to read the complete S-1 filing at http://www.sec.gov/Archives/edgar/data/1381790/000093041311001975/c64822_s-1a.htm
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