Deals for 2 Companies Heat Up For-Profit Sector

September 22, 2009

The Education Management Corporation, whose colleges enroll more than 110,000 students online and on 92 campuses, is planning to go public again, three years after it was taken private by a group of high-profile investors.

The company, which owns Argosy Univesrity, the Art Institutes, Brown Mackie College, and South University, plans to raise about $350-million from the offering. Its investors—Providence Equity Partners, Goldman Sachs Capital Partners, and Leeds Equity Partners—will still collectively own more than 65 percent of the company after the stock offering.

Education Management, which is based in Pittsburgh, said it would use most of the proceeds of the sale to pay off debt. The investors paid $3.4-billion to buy Education Management in 2006, but financed a large portion of the purchase with debt, which has left them with heavy interest payments.

The planned stock offering comes just days after the investor group that owns the 21 campuses of Vatterott Colleges announced that it was selling that for-profit college to another investor group, TA Associates. TA Associates is the firm that once owned a majority stake in the Florida Career College chain.

Vatterott's owner, Wellspring Capital Management, acquired the Missouri-based chain in 2003. Vatterott enrolls about 7,500 students on campuses in several Midwestern states.

The deals are the latest of several high-profile financial transactions involving for-profit-college companies over the past year, including the initial public offerings of Bridgepoint Education in April and of Grand Canyon University in November.