Nord Anglia Education Inc (NYSE:NORD), an international operator of premium English-language schools, with principal offices in Hong Kong, plans to raise $304.0 million in its upcoming IPO.
The firm will offer 19.00 million shares at an expected price range of $15-$17 per share. If the IPO can find the midpoint of that range at $16 per share, NORD will command a market value of $1.5 billion.
NORD filed on February 18, 2014.
Lead Underwriters: Credit Suisse Securities LLC, Goldman Sachs & Co, JP Morgan Securities LLC
Underwriters: Barclays Capital Inc, BMO Capital Markets Corp, Deutsche Bank Securities Inc, HSBC Securities Inc, RSC Capital Markets LLC, William Blair and Co LLC
NORD is an international operator of premium schools, which it defines as schools charging at least $10,000 in annual tuition. NORD charges significantly more than this figure; in fiscal 2013, the firm's average revenue per student was approximately $26,600. As of March 9, 2014, the firm's 27 K-12 schools had over 17,000 students.
NORD's schools are spread across North America, China, Europe, the Middle East and Southeast Asia, and are located in areas with high foreign direct investment, large expatriate communities, and increasing disposable incomes-in other words, areas where wealthy Anglophones are likely to seek out premium English-language education for their children. As of November 30, 2013, 73% of NORD's student population was composed of expatriates. Most of NORD's schools teach the English National Curriculum, and have done so to great effect; approximately 20% of the schools' 2013 graduates matriculated to one of the world's top 30 universities.
NORD offers the following figures in its F-1 balance sheet for the three months ended November 30, 2013:
Net Income: $9,600,000.00
Total Assets: $1,094,600,000.00
Total Liabilities: ($1,066,800,000.00)
Stockholders' Equity: $27,800,000.00
NORD has demonstrated an impressive ability to increase its student population in recent years, with a compound annual growth rate of 29% in enrollment from the end of fiscal 2008 through the end of fiscal 2013. The firm has also been able to increase its tuition rates by 4-6% each of the last three years.
NORD faces competition from numerous other premium English-language schools worldwide; the International School Consultancy Group's most recent figures account for over 7,000 international English-language schools, 42% of which teach a British curriculum. These schools are increasingly populated by children from wealthy local families rather than wealthy expatriates.
NORD is significantly indebted; the firm had a total debt of $658.3 million as of November 30, 2013. Though this debt isn't crippling, debt service will soak up the majority of the funds raised in this IPO, and will continue to affect NORD's operations into the future.
CEO Andrew Fitzmaurice has served in his current position since 2003. He previously served as CEO of easyCar.com and in various positions including division managing director over 13 years with TNT Express UK. Mr. Fitzmaurice graduated from the University of Wales Cardiff, Magna Cum Laude, with a degree in economics.
We rate this IPO as neutral.
While NORD has achieved impressive enrollment growth, and its record of placing students in top universities will no doubt continue to appeal to wealthy ex-pats and ambitious international students, its indebtedness is troubling, along with huge tuition costs. We are currently planning on avoiding this IPO.
Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in NORD over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.