Chinese Education Tycoon Loses $15B As His Shares Plunge 98% Amid Crackdown

Larry Chen, the former school teacher who became one of the world’s richest people, has lost his billionaire status as China cracks down on its private education sector, Venus Feng reported for Bloomberg News.

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 curricula from making profits, raising capital or going public. It’s the latest blow for Chen, who has shed more than $15 billion in wealth since late January as Gaotu’s stock tumbled.

Gaotu “will comply with the regulations and fulfill social responsibilities,” Chen said in a statement on Weibo, a Chinese Twitter-like service, late on Saturday night.

China’s harshest-ever curbs on its US$100 billion private-tutoring and online education sector have hit investors from Tiger Global Management to Temasek Holdings, with platforms losing the ability to go public, depriving their backers of exits, and foreign capital being banned from the sector.

The overhaul will also weigh on leading industry players over the next several years, Catherine Lim, a senior analyst at Bloomberg Intelligence, wrote in a note Sunday, referring to New Oriental and TAL.

Operating losses “can only worsen,” she said. Chen wasn’t the only one who saw his wealth plunge. TAL Education Group CEO Zhang Bangxin’s fortune fell by $2.5 billion to $1.4 billion after the company’s shares plunged 71% in New York on Friday.

New Oriental Education & Technology Group Inc. Chairman Yu Minhong also lost his billionaire status, shedding $685 million and leaving him with a stake value of $579 million after the firm sank 54%.

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