Shares of Bridgepoint Education (NYSE: BPI) have plunged today, down by 13% as of 1:34 p.m. EDT, after the company said that it had priced a secondary offering that was announced yesterday. Private equity firm Warburg Pincus, Bridgepoint's largest shareholder, is reducing its stake in the company from 33% to 26%.
Warburg Pincus is selling nearly 2.1 million shares out of the total 9.6 million shares it held before the offering. All net proceeds of the offering will go to Warburg Pincus, as no shares are being sold by Bridgepoint directly. No executives are selling shares in the offering, either. The offering is expected to close on Aug. 18, 2017.
BTIG is the sole underwriter for the offering, and subsequently intends to be a market maker in Bridgepoint shares.
The offering price has not been officially disclosed publicly, but BTIG has reportedly priced the offering at $9.10, which would represent a 10% discount compared to yesterday's close of $10.06.
It's never a good sign when the largest shareholder of a company decides to trim its position by a meaningful amount. Warburg Pincus is cashing out over 20% of its holdings, and Bridgepoint does not benefit in any way, as it will not receive any of the proceeds. This comes on the heels of Bridgepoint shares falling 22% over the course of two days last month after the company reported disappointing earnings in the second quarter, more than erasing gains from its first-quarter earnings pop.