Nord Anglia Education, Inc. Statement Filed with the Securities and Exchange Commission S in Any Jurisdiction Where the Offer Or Sale Is Not Permitted
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SUBJECT TO COMPLETION, DATED MARCH 11, 2014 19,000,000 Ordinary Shares 13FEB201409511100 Nord Anglia Education, Inc. statement filed with the Securities and Exchange Commission s in any jurisdiction where the offer or sale is not permitted. This is the initial public offering of our ordinary shares. We are offering 19,000,000 ordinary shares. We expect the initial public offering price to be between $15.00 and $17.00 per share. We have applied to list our ordinary shares on the New York Stock Exchange under the symbol ‘‘NORD’’. The underwriters have an option to purchase up to an additional 2,850,000 shares from us to cover over-allotments, at the initial public offering price less underwriting discounts and commissions, within 30 days from the date of this prospectus. We are an ‘‘emerging growth company’’ under the U.S. federal securities laws and will be subject to reduced public reporting requirements. Investing in our ordinary shares involves risks. See ‘‘Risk Factors’’ beginning on page 20 of this prospectus. Underwriting Initial public discounts and Proceeds, before offering price commissions(1) expenses, to us Per share ........................ $ $ $ Total ........................... $ $ $ (1) See ‘‘Underwriting’’ for details of compensation to be received by the underwriters. The underwriters expect to deliver the ordinary shares to purchasers on or about , 2014. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. Credit Suisse Goldman, Sachs & Co. J.P. Morgan Barclays Deutsche Bank Securities RBC Capital Markets BMO Capital Markets HSBC William Blair The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration The information in this prospectus is not complete and may be changed. We is effective. This prospectus not an offer to sell these securities and it soliciting buy securitie The date of this prospectus is , 2014 13FEB201409522625 Table of Contents Page Prospectus Summary ....................................................... 1 Risk Factors .............................................................. 20 Special Note Regarding Forward-Looking Statements ................................ 42 Market and Industry Data ................................................... 42 Use of Proceeds ........................................................... 43 Capitalization ............................................................. 44 Dilution ................................................................. 45 Dividend Policy ........................................................... 47 Corporate History and Structure ............................................... 48 Unaudited Pro Forma Condensed Consolidated Financial Information ................... 51 Selected Consolidated Historical Financial Data .................................... 57 Management’s Discussion and Analysis of Financial Condition and Results of Operations ..... 62 Industry Overview ......................................................... 90 Business ................................................................ 96 Regulation ............................................................... 119 Management ............................................................. 125 Principal Shareholders ...................................................... 135 Related Party Transactions ................................................... 137 Description of Share Capital .................................................. 139 Shares Eligible for Future Sale ................................................ 148 Taxation ................................................................ 150 Underwriting ............................................................. 154 Expenses Related to this Offering .............................................. 160 Legal Matters ............................................................ 161 Experts ................................................................. 161 Enforceability of Civil Liabilities ............................................... 162 Where You Can Find Additional Information ..................................... 163 Index to Consolidated Financial Statements ....................................... F-1 You should rely only on the information contained in this prospectus or in any related free writing prospectus that we have filed with the SEC. Neither we nor the underwriters have authorized anyone to provide you with information that is different. If anyone provides you with different or inconsistent information, you should not rely on it. This prospectus may only be used where it is legal to offer and sell these securities. Unless otherwise indicated, the information in this document may only be accurate as of the date of this document. We have not taken any action to permit a public offering of our ordinary shares outside the United States. Persons outside the United States who come into possession of this prospectus must inform themselves about and observe any restrictions on the offering of our ordinary shares and the distribution of this prospectus outside the United States. Until , 2014 (25 days after commencement of this offering), all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers’ obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions. i PROSPECTUS SUMMARY The following summary highlights selected information appearing elsewhere in this prospectus and should be read in conjunction with the more detailed information and financial statements appearing elsewhere in this prospectus. You should read the entire prospectus carefully, including our financial statements and the related notes and the sections entitled ‘‘Risk Factors’’ and ‘‘Management’s Discussion and Analysis of Financial Condition and Results of Operations’’ before deciding whether to buy our ordinary shares. Unless otherwise specified or the context requires otherwise, the terms ‘‘we,’’ ‘‘us,’’ and ‘‘our’’ refer to Nord Anglia Education, Inc., its predecessor, and their respective consolidated subsidiaries; ‘‘China’’ and ‘‘PRC’’ refer to the People’s Republic of China, excluding Taiwan, Hong Kong and Macau; and ‘‘$’’ and ‘‘dollars’’ refer to the legal currency of the United States. Operating data concerning students and ‘‘FTEs’’ relate to full-time equivalent students. Our fiscal year ends August 31 for all periods presented. This prospectus contains information from reports we commissioned from The Parthenon Group LLC, a global consulting firm and one of our shareholders, in 2013 and 2012; unless otherwise indicated, references to Parthenon are to the 2013 report. Our Business We believe we are the world’s leading international operator of premium schools. As of March 9, 2014, we had over 17,000 students, and in fiscal 2013 our average revenue per student was approximately $26,600. We teach children from kindergarten through the end of secondary school (‘‘K-12’’) at our 27 premium schools in China, Europe, the Middle East and Southeast Asia (‘‘ME/ SEA’’) and North America. Parthenon estimates that globally K-12 premium schools teaching primarily in English generated revenue of approximately $58 billion in the 2012/2013 academic year. We define premium schools as schools charging at least $10,000 per year in tuition fees. We primarily operate in geographic markets with high foreign direct investment (‘‘FDI’’), large expatriate populations and rising disposable incomes. We believe that these factors contribute to high demand for premium schools and strong growth in our business. Our student enrollment increased at a compound annual growth rate (‘‘CAGR’’) of 29% from the end of fiscal 2008 to the end of fiscal 2013. Our commitment to quality drives our strong operating performance. Almost all of our schools teach the English National Curriculum, and our principals, teachers and support staff strive to maximize every student’s academic performance. Although our admissions policy is not based on academic ability, and English is not the first language of many of our students, our students’ standardized examination results exceed global averages. In 2013, nearly one out of five of our graduates matriculated to one of the world’s top 30 universities, as ranked by QS World University Rankings. Our academic quality helps us maintain our market-leading position, supports our premium pricing and drives consistent enrollment growth. Our schools derive all of their revenue from private sources and therefore are not exposed to government funding risk. As of November 30, 2013, 73% of our students were expatriates and 27% were from local families. Employers of expatriates fund most of our tuition fees as part of expatriate compensation packages, through allowances or direct payments to our schools. Education benefits are often key recruitment incentives for expatriate employees. Our attractive business model leads to good visibility, price inelasticity, low capital requirements and strong cash generation. Our average student tenure of 3.5 years provides good visibility on future enrollments and revenues. Our private-pay model and the importance of education to parents make us resilient to changing