Heads & Tails Review For Bridgepoint IPO (BPI)

Bridgepoint Education (NYSE: BPI) was a quasi-stealth initial public offering when you consider how few IPO’s we have seen over the last 8-month period.  As it was publicized less and received less attention than other IPO’s, it is also seeing some very mixed performance.  The company is in the hot field of being a provider of online and campus universities.

The company raised $141.75 million after selling some 13.5 million common shares at $10.50 per share.  The stock traded as low as $9.75 as the lowest post-price tick today, but shares are currently at $11.19.  The good news is that this still technically qualifies as an up-IPO if you got in on the price.

The problem is that the company raised much less in funding than it anticipated.  There was an estimated pricing range of $14.00 to $16.00 per share.  Our issue with this IPO is that 10 million shares were being sold by Warburg Pincus and affiliates as insiders.  If the overallotment option is not exercised, this would represent only 3.5 million shares being sold by the company itself.  IPO investors generally do not like to see all of their fresh investment going to pay off private equity or venture backers.  Warburg Pincus is also still going to be the majority owner here.

Credit Suisse and J.P. Morgan were the lead underwriters; and co-managers were William Blair, BMO Capital Markets, Piper Jaffray, and a firm called Signal Hill Capital Group.  Those underwriters also have an overallotment option of 2.025 million shares.

JON C. OGG