Grand Canyon U. Goes Public

Grand Canyon Education Inc., which operates the for-profit Grand Canyon University in Arizona, on Wednesday became the first company in four months to carry off an initial public offering when it completed its plan to raise $126-million by issuing 10.5 million shares through a consortium of investment banks.

The deal came in the wake of dozens of other companies’ canceling or postponing similar offerings, and was taken as a signal of investors’ measured confidence in the company’s business model. The price Grand Canyon commanded for its stock, about $12 per share, was far less than the $16 to $18 per share the company had hoped to get when it made known its plans to go public this past spring.

Since then, Wall Street has been in turmoil and the parent company has disclosed that the university is being investigated by the inspector general of the U.S. Department of Education. That investigation focuses on how employees who recruit students are compensated. In its regulatory filings with the U.S. Securities and Exchange Commission, the company has also revealed that it is the target of a “whistle-blower” lawsuit accusing it of violating the federal False Claims Act in obtaining student-aid funds.

Grand Canyon University, which was formerly a nonprofit institution, was acquired by investors in 2004. They have since overseen a rapid rise in enrollment, mostly through online offerings aimed at adult students. The company says that, as of September 30, enrollment stood at about 22,000, an increase of 63 percent over the figure a year earlier.

The stock is scheduled to begin trading on the Nasdaq market under the symbol LOPE on Wednesday. —Goldie Blumenstyk