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Education Management Corporation EDMC IPO today

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(Update 2) It appears EDMC IPO had warm reception. After all, it’s backed by Goldman (both as investor and IPO underwriter). Also from Reuters.

(Update) BTW, I found Echo Global Logistics IPO to be much more interesting, will write it up soon.

(Original) Priced at $18 a piece (Reuters), quote:

EDMC (web site), a provider of post-secondary education, said on Thursday that shares in its initial public offering priced for $18 each, at the bottom of the range.

The private equity backed company sold 20 million shares and said it expects net proceeds of $334.8 million. (My comment: 20 m shares is about 17% of the company, this priced EDMC roughly at $2 b).

The company runs 92 schools, including Argosy University, and had about 111,000 enrolled students as of last October, according to a regulatory filing. (my comment: EDMC competes against Apollo Group (Nasdaq:APOL), Devry (NYSE:DV), and others).

Shares of Grand Canyon Education Inc (LOPE.O) have risen 47.3 percent since its November 2008 IPO, while Bridgepoint Education Inc (BPI.N) shares are up 38.9 percent since April. (my comment: we need to put it into context the same time S&P also went up a lot, so don’t get overly excited, and assume if you buy EDMC today, you will get same performance in 6-12 months).

EDMC company (web site here)

Initially Dec 2007, due to recession, pushed back to now (google EDMC ipo)

S-1A (SEC filing, link)

My thoughts

For profit education, mostly combining online courses with classroom interaction, offering class from accounting to surgical technologist, helps both working adults to further their career, and to get necessary training for new career (healthcare related is a hot one lately). This sector became even hotter because of the recession (more people got unemployed, and need to switch field to find a new job), and the stimulus package.

But there is a flip side too. There are more providers (competition). There is a cheaper and (supposed to be good) alternatives: community college. Although one can argue community college may not be flexible as for profit insitutions.

Long term, I believe online education has a bright future, both from traditional college and for-profit ones. I used to be skeptical of online classes, not anymore.

IPO home (week of Sept 28)

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