Investors in China’s $100bn private education business are stuck

For now, investors are stuck between marking down their portfolios drastically or getting battered in a sell-off.

Global investors from Tiger Global Management to Temasek Holdings Pte are reeling after China imposed the harshest curbs yet on its $100 billion private tutoring and online education sector. China on Saturday ordered companies that offer tutoring on the school curriculum to go non-profit, potentially wiping out a big chunk of the billions that private equity and venture capital funds have staked on a once red-hot sector. The platforms have lost their ability to go public — depriving their backers of the exits they need to cash out. Foreign capital was banned from the sector, with uncertain ramifications for the likes of Singapore’s Temasek and GIC Pte as well as Warburg Pincus and SoftBank’s Vision Fund, which have all invested in many of the industry’s big players. Those in violation of that rule must take steps to rectify the situation, the country’s most powerful administrative authority said, without elaborating.