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Chinese education tycoon loses $15 billion as company shares plunge 98%
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Chinese Education Tycoon Loses $15 Billion as Shares Plunge 98%
Venus Feng, Bloomberg News BC-Chinese-Education-Tycoon-Loses-$15-Billion-as-Shares-Plunge-98% , Venus Feng
(Bloomberg) Larry Chen, the former school teacher who became one of the worldâs richest people, has lost his billionaire status as China cracks down on its private education sector.
Chen, the founder, chairman and chief executive officer of Gaotu Techedu Inc., is now worth $336 million, according to the Bloomberg Billionaires Index, after shares in his online-tutoring firm plunged by almost two-thirds in New York trading on Friday on reports of the regulatory overhaul.
On Saturday, China released new regulations that ban companies that teach school curriculums from making profits, raising capital or going public. Itâs the latest blow for Chen, who has shed more than $15 billion in wealth since late January as Gaotuâs stock tumbled.
China’s State Council issued a sweeping warning to China’s biggest companies, vowing to tighten oversight of data security and overseas listings. That announcement followed the opening of a security review by China’s internet regulator last week and a demand for app stores to remove Didi.
Didi’s American depositary shares fell 20% to $12.49, wiping out about $15 billion of market value and taking the stock below the $14 price from its initial public offering. Beijing-based Didi controls almost the entire ride-hailing market in China and raised $4.4 billion last week in the second-largest U.S. IPO for a Chinese firm.
The State Council’s broadside marked an escalation in President Xi Jinping’s campaign to bring the nation’s technology firms and their reams of valuable data under control. Over the weekend, China also moved against two other companies that also recently listed in New York, Full Truck Alliance Co. and Kanzhun Ltd., Ltd.