Grand Canyon Education, Inc. (NASDAQ: LOPE) priced its initial public offering of 10,500,000 shares of its common stock at $12.00 per share. This pricing was at the lower-end of yesterday’s lowered range. Trading just began, and it is not pretty. On this IPO, the problems were not just a horrible stock market.
This was first set to price at $18.00 to $20.00, then at $16.00 to $18.00, and then at $12.00 to $14.00. You already saw that it priced at the bottom of its twice-lowered range. Credit Suisse and Merrill Lynch & Co. (MER) were lead underwriters and co-managers werelisted as BMO Capital Markets, William Blair, and Piper Jaffray.
The problem here is that 75% of the IPO proceeds were immediatelygoing out the back door to the backers of the company. That may begreat for them. But if you buy into an IPO at the subscription pricein a horrible IPO market, then how many investors want 75% of theirfunds to go straight to the backers rather than to the company they areinvesting in? We haven’t found too many that would say, “That would be ME!”
You can join our open email distribution list to hear about otherIPO’s, secondary offerings, special financing packages, private equity,Warren Buffet activities, and other special situations.
We warned about this sort of insider cash grab from the start. Sharesare paying the price now. Despite a $12.00 pricing, this one is downat $10.25 right now. Its daily range in the minutes since the open so far is alsoonly $9.49 to $10.90.
Jon C. Ogg
November 20, 2008