Education Management, Echo Global IPOs Price Within Range

NEW YORK (Reuters) – Education Management Corp (EDMC.O), 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.

The company runs 92 schools, including Argosy University, and had about 111,000 enrolled students as of last October, according to a regulatory filing.

The stock benefited from the success of the IPOs by Education Management’s peers in the past year and lingering unemployment that is leading job-seekers to look for new skills, an analyst said.

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.

“With the unemployment situation seemingly not abating any time soon, and perhaps worsening, it should bode well for future enrollment increases,” said Scott Sweet, a senior managing partner at advisory firm IPO Boutique said on Thursday.

In June 2006, Education Management, which is based in Pittsburgh, was bought by a group of private investors, led by Providence Equity Partners, Goldman Sachs Capital Partners (GS.N) and Leeds Equity Partners, for $3.4 billion.

These funds collectively will still own 65.5 percent of the company after the IPO, according to a regulatory filing.

In the year ended June 30, 2009, company revenue rose 19.4 percent to $2.01 billion, with net income of $104.4 million.

Education Management will use most of the proceeds to pay down debt, according to its prospectus.

The IPO was managed by Goldman Sachs & Co, JP Morgan, Bank of America Merrill Lynch, Barclays Capital, Credit Suisse and Morgan Stanley. The underwriters have the option of buying another three million shares.


Echo Global Logistics Inc (ECHO.O) which provides Internet-based systems that manage truck, train and air shipping logistics, priced shares for $14, in the middle of the range and sold 5.7 million shares, a underwriter said.

The offering raised $79.8 million for the Chicago-based company.

Underwriters for Echo Global’s IPO, which was led by Morgan Stanley and Credit Suisse, have the option to purchase up to an additional 855,000 shares.

Echo Global will use the proceeds to expand its sales force and beef up its technology.

Shares in both companies are set to start trading Friday on Nasdaq, Education Management under the symbol “EDMC” and Echo Global under the symbol “ECHO.”

Almost all the U.S.-listed IPOs this year have priced within range.

(Reporting by Phil Wahba; editing by Carol Bishopric)