University of Phoenix owner raises $136 million in IPO, shares to start trading

Early trading in Phoenix Education Partners, the parent of the University of Phoenix, has started on the Freedom Finance platform. The shares will list on the New York Stock Exchange today, October 9, under the ticker PXED.

Phoenix Education Partners and selling shareholders, including affiliates of Apollo Global Management and Vistria Group, have raised $136 million in an IPO, selling 4.25 million shares at $32 apiece, the midpoint of the $31-33 marketed range. At that price, the company’s implied market value is about $1.14 billion, reports Bloomberg. 

The underwriting syndicate is led by Morgan Stanley, Goldman Sachs, BMO Capital Markets, and Jefferies, with Apollo Global Securities and Truist Securities as joint bookrunners.

The University of Phoenix, founded in 1976 by entrepreneur and economist John Sperling, provides continuing education and focuses primarily on working adults in the U.S. Today, it offers 72 degree programs and 33 certificate programs across various fields.

According to analyst Ariel Sokol on Seeking Alpha, the university has produced more than 1.1 million graduates and awarded about 1.3 million degrees. About 30% of students enroll through corporate employer programs – a figure that has been growing at a CAGR of 32% since 2022, with the B2B training track remaining a key priority for future expansion.

According to documents filed with the SEC, net revenue and average annual degree enrollment increased at an average annual rate of 9% between fiscal years 2022 and 2024. Key indicators also improved: student satisfaction rose to 82.3%, retention to 71.5%, and the graduation rate to 37.0%. Through cost optimization, the company has reduced administrative expenses by more than $100 million since 2016. For fiscal 2024 (ended August 31), it reported net income of $113.1 million on revenue of $950 million, compared with $64.9 million in profit and $835.2 million in revenue a year earlier.

Looking ahead, Phoenix Education Partners plans to strengthen partnerships with employers, develop AI-based platforms for training and career development, and further improve student retention and academic performance through technology investments.

The IPO came shortly after Phoenix Education backed out of a deal to sell the University of Phoenix to another institution for $550 million, Bloomberg reports. The university’s majority owner paid $12.2 million in liquidated damages to the University of Idaho after terminating the 2023 divestiture agreement.  

The fair value of Phoenix Education Partners, calculated using an industry-average price-to-sales ratio of 1.59 and trailing 12-month revenue of $864.57 million, is $38.62 per share – 17% above the high end of the IPO price range, notes Freedom Holding analyst Alem Bektemirov. He believes the main risks to the business include loss of accreditation, market competition, and changes in student funding levels.

In Seeking Alpha, Sokol notes that Phoenix Education Partners is priced at just a fraction of the valuation of peers. "This presents either an opportunity for a trade on the IPO day or a longer hold period where the stock trades relatively on par with its publicly traded for-profit higher ed peers," he highlighted. Sokol adds that the company has healthy margins, no debt, and little regulatory overhang under the Trump Administration.

According to Josef Schuster, CEO of IPOX, "excellent sentiment for U.S. IPOs overall will continue to benefit private-equity-backed IPOs as well," Reuters reported.

“Given that PE deals are capital structure transactions with no proceeds going to the firm; however, it's much more a buyer's market for those deals,” Schuster concluded.

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Freedom Broker clients will be able to trade Phoenix Education Partners shares before the start of the main U.S. session today. Premarket trading will open 2-3 hours early, at 15:30-16:30 Astana time. Investors can participate by selecting the ticker PXED on the Freedom platform.

The AI translation of this story was reviewed by a human editor.