NETEASE Inc. is planning an initial public offering in the United States of its Youdao arm that could raise at least US$300 million, people familiar with the matter said, propelling its expansion into a crowded online education arena.

The company is working with Morgan Stanley and Citigroup Inc. on the share sale with a goal to list as early as in the third quarter, said the people. A deal could value Youdao at about US$2 billion, one of the people said. The firm could file confidentially as soon as in coming weeks, according to another person.

Netease is delving deeper into adjacent sectors from e-commerce to media content. Its Youdao arm, founded in 2006, explored several business models before settling on becoming an Internet education platform about five years ago. It now offers everything from online dictionaries to math courses and prep classes for important certification-tests.

The company completed its first round of financing in April last year at a post-money valuation of US$1.12 billion, according to its website. Deliberations are at a preliminary stage and details of the share sale including fundraising size and timeline could still change, the people said.

(SD-Agencies)