Rosetta Stone (NYSE, RST) and its stockholders raised $112.5 million in the company's initial public offering of 6.25 million shares priced at $18 per share. The company's investors sold half of the shares raising an estimated $52.3 million net of expenses. ABS Capital Partners sold 2 million of its 7.5 million shares for a total of $36 million, well above the $29 million of equity it originally invested in the company. Norwest Equity Partners sold 1.5 million of its 5 million shares for $27 million. The stock closed the day at $25.12, valuing ABS' reaming stake at around $135 million and Norwest's stake at about $90 million. The two PE firms acquired the company in a management buyout in 2006 for $62 million.
There have been nine other education companies backed by private equity firms that have gone public since 2001, according to the PitchBook Platform. The biggest offering was Apollo Investment Management backed Educate's 2004 IPO for $165 million. The company has since been acquired by Sterling Partners and Citigroup Alternative Investments. The recent cluster of PE-backed education company IPO's (three in the past five months) may show that private equity firms are taking advantage of the counter-cyclical nature of education companies to exit them for a profit during the current recession. The GS Capital Partners and Providence Equity Partners owned Education Management Corporation is no doubt watching Rosetta's and Bridgepoint Education's offerings to gauge how its $500 million IPO might fare.