(Adds analyst comments, background on company)
NEW YORK Nov 19 Grand Canyon Education Inc
(LOPE.O) shares priced at $12 on Wednesday in the company's
initial price offering, at the lower end of its estimated price
range, an underwriter said.
The pricing broke a nearly 15-week slump without an IPO in
the United States, the longest in decades.
The Phoenix, Arizona-based on-line university operator sold
10.5 million shares, for total proceeds of $126 million.
The company twice lowered its estimated price range prior
to the IPO, including on Wednesday morning when it reduced it
to between $12 to $14, from between $16 and $18.
"The falling price estimate range was a tell-tale sign of
low demand for Grand Canyon's IPO," said Scott Sweet, a senior
managing director with advisory firm IPO Boutique."
He added: "The pricing at this range gives this IPO a shot
at success, but if anyone's interested in education, they can
choose Apollo (APOL.O) and Capella Education (CPLA.O),"
referring to two direct competitors, whose valuation multiples
he said are lower than that implied by the $12 price and which
enjoy substantial analyst coverage.
About 75 percent of the proceeds of the offering will be
used for a special distribution to existing shareholders,
according to a regulatory filing.
The last IPO in the United States had been by Texas-based
Web hosting company Rackspace Hosting Inc RAX.N. Since then
29 companies have canceled or postponed their initial
offerings, according to Thomson Reuters data, as markets have
Sweet said the slow IPO market had forced Grand Canyon to
lower its expectations. "In the right environment, Grand Canyon
would have seen far more demand, and priced higher, but in this
environment, it's a mild success that they even got the deal
Grand Canyon, which was founded in 1949 and became a
for-profit institution in 2004, provides on-line post-secondary
programs primarily serving working adults.
As of late September, the company had an enrollment of
22,000 students, according to the filing. For the nine months
ended on Sept. 30, the company had net revenues of $109.6
million and operating income of $9 million.
The IPO's underwriters, led by Credit Suisse CSGN.VX and
Merrill Lynch & Co MER.N have the option to purchase up to
1.575 million additional shares of common stock to cover
over-allotments of shares.
The company plans to begin trading its stock Thursday on
the Nasdaq Global Market under the symbol "LOPE."
(Reporting by Phil Wahba; Editing by Bernard Orr, Gary Hill)