Education Management Initial Public Offering (IPO)

Lynn Cowan:

The IPO of for-profit college operator Education Management Corp. scored well with investors Friday, while shipment router Echo Global Logistics Inc. struggled to attract them.
Education Management’s initial public offering of stock closed at $21.77 on the Nasdaq Stock Market, up 21% from its offering price of $18. It sold 20 million shares at the low end of its expected price range of $18 to $20 a share.
Pittsburgh-based Education Management has increased its enrollment and revenue through 2008 and 2009. The company operates four for-profit colleges: the Art Institutes, Argosy University, Brown Mackie College and South University.
About 82% of Education Management’s revenue is derived from federal student-aid programs, which require it to meet certain financial responsibility standards. But a high level of debt — $1.99 billion in June — puts it out of compliance and requires the company to post a $120.5 million letter of credit.
Education Management was taken private for $3.4 billion in 2006 by a consortium of investors that included Providence Equity Partners, Goldman Sachs Capital Partners and Leeds Equity Partners. The buyout was financed by a large chunk of debt.