It's A Deal
November 21, 2008
Get Smart
It's been said that the highest result of education is tolerance.
Grand Canyon Education holders should keep that in mind on the heels of the company's bold IPO Thursday. The shares held up OK, relatively speaking, so give the company (and lead underwriters Credit Suisse and Merrill Lynch) extra credit for braving arguably the most brutal IPO environment in 30 years.
And, just maybe, there are a few lessons to be learned from the offering of the online education company. Plus, it was either writing about this or Neel Kashkari as one of the world's sexiest men alive. Maybe next week.
First, the boring details. The shares ended up pricing at 12 bucks a pop, after not one but two cuts to the price range in the past two weeks, and way below the originally planned $18 to $20 range.
The shares closed down fractionally Thursday and are now flat, but what's notable about this deal, of course, is that there hasn't been an IPO in the US for 132 years (OK, it's only been since August, but it's still the longest drought since the '70s).
So, is this the breach of the IPO dam, that little trickle that's going to quickly lead to further erosion and ultimately offer a gushing flow of fee-generating IPOs?!
Not a chance. But it's still an interesting deal. On the one hand, you've got a rapidly increasing pool of potential students, also known as the unemployed, who tend to bulk up their resumes when they have nothing else to do. So that's great news. Now, to pay for it, just go out and get a student loan and you'll ... oops. You probably have as much chance of transferring to Oxford after two years at Grand Canyon University as you do of getting a student loan these days.
But maybe the fact that this small concern wasn't brutalized on a day when the S&P 500 fell another 7% and closed at its lowest level this decade offers some glimmer of hope. (How's that for a "glass-half-full" outlook?) At least it shows that the market for new issues still knows how to operate, right?
Interestingly, the pricing came on the same day that Grant Thornton issued a missive on the "crisis" in the IPO market. "The subversion of the IPO market threatens the American Dream," the firm opines. Oh, is that all?
Seems like a lot of pressure to put on Grand Canyon Education.
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