Bridgepoint Education IPO gets poor reception
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San Diego-based higher education company Bridgepoint Education Inc. faced a tough investor crowd when the firm floated its initial public stock offering late Tuesday.
The company sold 13.5 million shares at $10.50 each -- far below the $14 to $16 a share it had hoped to fetch.
The stock will begin trading on the New York Stock Exchange on Wednesday under the symbol BPI.
Bridgepoint, founded in 2004, offers associate’s, bachelor’s, master’s and doctoral programs in business, education, psychology, social sciences and health sciences. The company has two campuses (Ashford University in Iowa and University of the Rockies in Colorado) but 98% of its 31,000 students are enrolled online.
The company says it has tried to carve a niche for itself by focusing on affordable tuition and high transferability of credits. Revenue and profit have grown rapidly over the last few years. Bridgepoint earned $26.4 million in 2008 on revenue of $218 million.
Yet Wall Street apparently wasn’t impressed, even though higher ed is considered a good business in a recession as more people seek new skills. . . .
Shares of several Bridgepoint competitors have been under pressure on concerns about the industry’s growth outlook amid intense competition for students. DeVry Inc. shares are off 26% this year, Apollo Group is down 18% and Grand Canyon Education is off 22%. For Bridgepoint, one issue may have been that relatively little of the stock sale will benefit the firm directly: The company’s investors, including private equity firm Warburg Pincus, sold 81% of the shares offered in the IPO. Bridgepoint sold the rest, raising about $27 million. The proceeds will be used in part to pay off preferred stock.
Bridgepoint is just the third IPO priced this year. The market for new issues was virtually paralyzed in January and February amid the stock market’s winter plunge.
The only company that chose to sell shares in the first quarter was infant-formula maker Mead Johnson Nutrition, which was spun off from drug giant Bristol-Myers Squibb. Mead Johnson sold 30 million shares at $24 each on Feb. 10. The stock has gained 10% since then, to $26.50 Tuesday.
On April 2, the year’s second IPO made its debut: Changyou.com Ltd., a Chinese online game developer. The stock, sold at $16 a share, turned out to be a big hit: It has surged 68% from the IPO price, to $26.96 Tuesday.
-- Tom Petruno