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First High-School Education Group Co., Ltd.

Class Action
  • Active
Investigation
04/13/2022
Initial Lawsuit
05/11/2022
Lawsuit Progression
07/11/2022

Investigation

This investigation follows the large company’s stock price decline since the initial public offering (IPO). So why the decline? As always, numerous factors impacted the stock since the IPO, but this investors investigation focuses on the following.

As early as one week prior to the completion of the company’s IPO, from March 4, 2021 through March 11, 2021, China held its annual “Two Sessions” parliamentary meetings, where the two main political bodies of China meet, discuss, and reveal plans for China’s policies, including education. The following week, First High-School Education Group conducted its IPO. As of May 16, 2022, the stock price has dropped more than 90%, from the initial $10 IPO price per share.

  • Investigation Date
    04/13/2022
  • Public Offering Date
    March 11, 2021
  • Hypothetical Transgression
    Securities Violation
Main Event

Q2 2021 Impacted

09/28/2021

SEC Filing

The company issues a press release announcing its financial results for the first half of 2021 ended June 30, 2021, disclosing revenue of RMB231.9 million, a year-over-year increase of only 24.8%, compared to 30.5% year-over-year revenue increase for first nine months of 2020, and 32.5% year-over-year revenue increase for the full year 2020. The company explained that rules impacting its business “have set series of restrictions and guidelines on operation, taxation, shareholding structure, connected transactions and merge and acquisition of compulsory education.”

The stock impact compares the closing price immediately preceding the date of the event and the following closing price. The price difference also reflects the overall mix of information.

Stock Impact

Close Previous close Price variation Percentage variation
$3 $3.89 $-0.89 -22.88%
See more on Factual Timeline

Initial Lawsuit

First Complaint - 05/11/2022

This is a securities class action on behalf of all persons or entities who purchased First High-School Education Group Co., Ltd. American depositary shares (ADSs) in or traceable to the company’s March 2021 initial public offering (IPO).

Allegations

According to the complaint, defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the company’s business, operations, and prospects. Specifically, defendants allegedly failed to disclose to investors:

(a) that the new rules, regulations and policies to be implemented by the Chinese government following its annual “Two Sessions” parliamentary meetings were far more severe than represented to investors and posed a material adverse threat to the company and its business;
(b) that contemplated Chinese regulations and rules regarding private education were leading to a slowdown of government approval to open new educational facilities which would have a negative effect on First High-School Education’s enrollment and growth; and
(c) that, as a result, the registration statement’s representations regarding First High-School Education’s historical financial and operational metrics and purported market opportunities did not accurately reflect the actual business, operations, and financial results and trajectory of the company at the time of the IPO, and were materially false and misleading and lacked a factual basis.

Defendants

  • Company
    First High-School Education Group Co., Ltd.
  • Chief Executive Officer
    Shaowei Zhang
  • Chief Financial Officer
    Lidong Zhu
  • Director
    Guangzhou Zhao
  • Director
    Yuanlin Hu
  • Owner
    Longwater Topco B.V.
  • Owner
    EQT Mid Market Asia III Limited Partnership
  • Owner
    EQT Mid Market Asia III GP B.V.
  • Owner
    EQT Fund Management S.à r.l.
  • Authorized Representative
    Colleen A. De Vries
  • Authorized Representative
    Cogency Global Inc.
  • Underwriter
    The Benchmark Company LLC
  • Underwriter
    Valuable Capital Group Limited
  • Underwriter
    TFI Securities and Futures Limited
  • Underwriter
    AMTD Global Markets Limited
  • Underwriter
    Maxim Group LLC
  • Underwriter
    Boustead Securities, LLC
  • Underwriter
    Futu Inc.
  • Underwriter
    US Tiger Securities, Inc.
  • Underwriter
    Fosun Hani Securities Limited

Lawsuit progression

  • Docket Number
    1:22-cv-03831
  • Court
    New York Southern District Court

The lead plaintiff deadline has passed, we will update this page as the lawsuit progresses.
Last event retrieved on 09/24/2022.

Factual Timeline

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