Domestic, For-Profit, Investors, Required, Retention Rates - Written by on Monday, July 25, 2011 13:31 - 0 Comments

Bridgepoint Stock Tumbles as Warburg Exits Investment

Bridgetpoint Education Inc.

by Elbert Chu update: 11:08 PM

Bridgepoint Education Inc., (NYSE: BPI) fell as much as 13% today in intraday trading as investors absorbed news that Bridgepoint’s largest shareholder, private equity firm Warburg Pincus, filed a shelf document broadcasting intention to sell 65% of the company, according to Reuters. The 34.6M shares to hit the market will add pressure on the stock which just touched its 52-week high, $30.62, on Friday. Currently, the shares closed the session at $27.01, down $3.49.

During the Senate investigations, Bridgepoint attracted scrutiny from investigators for drop out rates above 60% over two years, one of the highest in the industry. In recent months, Bridgepoint had begun repurchasing shares, over $55M worth, that seems to have been a move to help prepare for Warburg’s move.

“Warburg is an incredibly successful, disciplined investor,” said Michael Clifford, one of the early organizers of Bridgepoint. “All of these firms want exits in 3-5 years.
The stock is at an all time high. It just makes sense for them to start liquidating. It’s very pragmatic for them and their investors.”

There remains a possibility that Warburg may be positioning to do a deal. “The action taken by the investor is not an indication of an immediate interest to sell their shares but represents a prudent decision to allow them to do a transaction with their holdings over the next 36 months,” Marianne Perez, a Bridgepoint spokesperson, told WiredAcademic.

Even if Warburg does not find a deal to land their investment, Clifford is optimistic for the long run, “I think it will help the stock by increasing the public float.”

Warburg took its stake in Bridgepoint in 2003 to help the school launch, and go public in 2009 at $10.50. Bridgepoint owns accredited schools, Ashford University, as well as the University of the Rockies.

Report at Reuters by Megha Mandavia.

Fool.com picked BPI as “Rising Star” in late May.



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