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United States securities and exchange commission logo
September 4, 2020
Dian Wang
Chief Executive Officer
Hywin Holdings Ltd.
F3, Hywin Financial Centre
8 Yincheng Mid. Road
Pudong New District, Shanghai City
People s Republic of China
Re: Hywin Holdings Ltd.
Draft Registration
Statement on Form F-1
Submitted August
11, 2020
CIK No. 0001785680
Dear Ms. Wang:
We have reviewed your draft registration statement and have the
following comments. In
some of our comments, we may ask you to provide us with information so
we may better
understand your disclosure.
Please respond to this letter by providing the requested
information and either submitting
an amended draft registration statement or publicly filing your
registration statement on
EDGAR. If you do not believe our comments apply to your facts and
circumstances or do not
believe an amendment is appropriate, please tell us why in your
response.
After reviewing the information you provide in response to these
comments and your
amended draft registration statement or filed registration statement, we
may have additional
comments.
Draft Registration Statement on Form F-1
Prospectus Summary
Implications of Being an Emerging Growth Company and a Foreign Private
Issuer, page 5
1. Please provide us with
supplemental copies of all written communications, as defined in
Rule 405 under the
Securities Act, that you, or anyone authorized to do so on your behalf,
have presented or
expect to present to potential investors in reliance on Section 5(d) of the
Securities Act, whether
or not you retained, or intend to retain, copies of those
communications. Please
contact Tonya K. Aldave at (202) 551-3601 to discuss how to
submit the materials,
if any, to us for our review.
Dian Wang
Hywin Holdings Ltd.
September 4, 2020
Page 2
Risk Factors, page 12
2. Please include a risk factor to address continuing anti-government
protests in Hong Kong
and their potential impact on your business, or tell us why you
believe this is not a
significant factor for your company or offering.
Our business may be deemed as a foreign investment under Foreign Investment
Law, page 27
3. Please update your disclosure in this risk factor as it appears that
the Foreign Investment
Law already took effect in January 2020.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Major Factors Affecting Our Results of Operations
Business and Product Mix, page 59
4. Please revise to disclose here, and elsewhere as appropriate, online
platform revenues
recognized in fiscal 2018, in order for the reader to understand the
trends in regard to the
discontinuation of these product offerings.
5. Please revise to disclose the revenues recognized from secondary
market products in 2018
as compared to 2019 as a result of the strategic shift in product
offerings. Further, disclose
the revenues recognized from private equity products sold in 2019.
6. Please revise to provide an AUM roll-forward of activity for the
periods presented, which
would enable the reader to clearly understand the strategic shifts in
business operations
and products offered as determined by management.
7. Please revise to disclose whether there is any specific length of time
the clients funds have
to be invested or whether they can manage their investments on an
ongoing basis, making
investment changes, withdrawals, or deposits at any point in time.
Wealth Management Services, page 61
8. Please revise to clarify whether performance based fees are based on
an individual
investor exiting their individual position in a fund product or based
upon an entire fund
closing or exiting its existing operations.
9. Please revise to provide a specific and thorough discussion of the
real estate products
offered, as well as changes in product mix within this category, fee
rate trends, and related
drivers.
10. Please revise to expand your discussion of distribution commissions for
each type of
wealth management product offered to investors. Your expanded
disclosures should
FirstName LastNameDian Wang
include discussion of when commissions are paid and provide enough
detail for readers to
Comapany NameHywin
understand Holdings
differences Ltd.
in fee structures among the products and see how
changes in
product
September mix Page
4, 2020 would2 impact fee trends.
FirstName LastName
Dian Wang
FirstName LastNameDian Wang
Hywin Holdings Ltd.
Comapany 4,
September NameHywin
2020 Holdings Ltd.
September
Page 3 4, 2020 Page 3
FirstName LastName
Asset Management Services, page 63
11. Please revise to disclose your accounting for the disposition of Hywin
Asset Management
to shareholders in June 2019.
12. Please revise to disclose the nature and terms of the August 2019
acquisition of Shenzhen
Panying Asset Mngt Co, Ltd. (the PRC fund manager licensed in private
equity
investments).
Critical Accounting Policies, Judgments and Estimates
Revenue Recognition, page 65
13. As it relates to the performance-based income, please revise to
describe the normal term
length of each of the contracts and indicate if the term length is the
period of time for
which an investor must remain invested, the term of the contractual
agreement with the
financial product issuer, or some other element.
Insurance brokerage services, page 72
14. Please revise to discuss and quantify the different types of insurance
products sold so that
a reader can better understand the underlying trends. If the products
sold generate
different commissions earned, this and related trends should also be
addressed.
Net revenues, page 72
15. Please revise to quantify related party revenues recognized by product
line type for each
of the periods presented. Expenses incurred and associated with these
revenues should
also be quantified within each of the different operating and expense
lines. In addition,
given the significant level of revenues recognized during the periods
presented, please
discuss the nature and terms of the contractual agreements with these
related parties,
individual names of these entities, and the nature of the related
party relationship.
Liquidity and Capital Resources
Operating Activities, page 75
16. Please revise the summary of cash flow information presented to
separately disclose
restricted cash for the periods presented.
17. Please revise to more fully discuss the changes in the commission
payment method and
payment schedules, which appear to have occurred during both fiscal
2018 and 2019, as
well as the reasons for the changes.
Customer Concentration Risk, page 77
18. Please disclose the identity of the customers who accounted for 16% of
your total
revenues for the year ended June 30, 2019, as well as the two
customers who accounted
for 27% and 20% your total revenues for the fiscal year 2018. In
addition, revise the last
Dian Wang
Hywin Holdings Ltd.
September 4, 2020
Page 4
risk factor on page 16 accordingly.
Quantitative and Qualitative Disclosures about Market Risk
Credit Risk, page 77
19. Please revise to provide a discussion of the credit risk relating to
deposits made to
suppliers, including disclosure and quantification of the deposits
made and payments
received for each period, description of how they arise, and the
business purpose of these
activities.
Industry
Competitive Landscape, page 85
20. Please disclose the names of Company Group A and Companies B, C and D
referenced in
this section, as well as Companies E and F referenced on page 86.
Business, page 97
21. We note your disclosure on page 102 about your international presence
and your
disclosure on page 112 that you have several offices in the United
States. Please revise
your disclosure to describe your current business activities outside
China and disclose the
locations of your office in the United States and other locations
outside China, or tell us
why you believe this information is not material.
Partnership culture, experienced management team with global perspective, page
101
22. Please briefly explain what "Global Strategy" and "Wealth+" Strategy
Suite mean.
Our Services
Wealth Management Services, page 103
23. Please revise to disclose the annualized returns for the publicly
raised fund products and
the other financial products as has been done for the privately raised
fund products for the
periods presented.
Related Party Transactions, page 136
24. We note that you provide references to other sections in the prospectus
for some related
party transactions. Those sections do not specify the relationship
between you and the
related party. Please revise or include this information here.
Similarly, describe the
nature of the relationship between you and (1) Yinling Group Entities,
(2) Five Bulls
FirstName LastNameDian Wang
Group Entities, (3) Yushang Group Co., Ltd.,. and (4) Real Estate Group
Entities listed on
Comapany
pageNameHywin Holdings
136. In addition, Ltd.the nature of the relationship to the
entities listed on page
disclose
137 4,
September under
2020subheading
Page 4 "Loans from/to Related Parties." Refer to Item 7.B
of Form 20-F.
FirstName LastName
Dian Wang
FirstName LastNameDian Wang
Hywin Holdings Ltd.
Comapany 4,
September NameHywin
2020 Holdings Ltd.
September
Page 5 4, 2020 Page 5
FirstName LastName
Jury Trial Waiver, page 156
25. We note your disclosure regarding the waiver of jury trial provision.
Please revise
your disclosure to:
clarify whether the provision applies to purchasers in secondary
transactions; and
include a new risk factor in the risk factor section of the
prospectus discussing the
material risks to investors related to the provision, including
the possibility of less
favorable outcomes, uncertainty regarding its enforceability, the
potential for
increased costs to bring a claim, and whether it may discourage or
limit suits against
you or the depositary.
Finally, please ensure that your deposit agreement states that the
waiver of jury trial
provision applies to claims made under the federal securities laws and
that by agreeing to
such provision, investors will not be deemed to have waived the
company s compliance
with the federal securities laws and the rules and regulations
thereunder.
Notes to Consolidated Financial Statements
Note 3. Summary of Significant Accounting Policies
(g) Accounts Receivable, net, page F-14
26. Please revise to include an accounts receivable roll-forward and an
aging analysis for the
amounts due from third parties for the periods presented. In addition,
discuss the
contractual repayment terms for these receivables.
o) Revenue Recognition
Wealth management service, page F-18
27. We note your revenue recognition disclosures here and in your Critical
Accounting
Policies. In regard to the one-time distribution commission from the
financial product
issuer, please revise to address the items below.
Discuss the performance obligations of the company in order to
earn the commission.
Indicate whether the commissions are earned with each individual
investment or if
they are received upfront and are based upon a certain sales
quota.
Tell whether the commissions and recognition of revenue differ
among the types of
wealth management products offered.
Address the commission payment arrangements, indicating if receipt
of the
commission is subject to any conditions between the investor and
the financial
product issuer.
Insurance brokerage service, page F-19
28. In regard to the one-time commissions received for serving as an
insurance broker to the
insurance company, please revise to address the items below.
Tell us the performance obligations of the company in order to
earn the commission,
define the cooling off period, and explain how it impacts these
obligations.
Indicate whether commissions are earned with each individual
insurance transaction
Dian Wang
Hywin Holdings Ltd.
September 4, 2020
Page 6
or if they are received upfront and are based upon a certain sales
quota.
Indicate how often the commission amounts are reviewed and amended
under the
agreements, how these actions impact revenue recognition, and why
they are applied
prospectively.
Describe in detail the clawback provisions that impact the
recognition of revenue,
quantifying these provisions in each of the periods presented.
Discuss the commission payment arrangements once the performance
obligations
have been fulfilled.
Note 15. Related Party Balances and Transactions, page F-33
29. Please revise to include an accounts receivable roll-forward and an aging
analysis for the
amounts due from related parties for the periods presented. In addition,
discuss the
contractual repayment terms for these receivables.
General
30. We note that throughout the prospectus you often describe the industry
and your
performance using compound annual growth rate ("CAGR"). Because CAGR only
represents two discrete snapshots in time, but does not show trends or
events during the
period represented, please balance your disclosure by also including the
annual rates for
the periods represented.
You may contact Marc Thomas at (202) 551-3452 or Cara Lubit at (202)
551-5909 if you
have questions regarding comments on the financial statements and related
matters. Please
contact Tonya K. Aldave at (202) 551-3601 or Dietrich King at (202) 551-8071
with any other
questions.
Sincerely,
FirstName LastNameDian Wang
Division of
Corporation Finance
Comapany NameHywin Holdings Ltd.
Office of Finance
September 4, 2020 Page 6
cc: Meng Ding, Esq.
FirstName LastName