CAPU, an upcoming IPO

Capella Education is a fast growing company that operates Capella University, an online university that offers undergraduate and graduate degree programs in business, organization and management, education, psychology, human services, and information technology. More than 12,000 students are enrolled in the school, which employs about 740 faculty members. Students seeking doctoral degrees account for 47% of enrollment. Nearly 70% of revenues are from federal student financial aid programs.

Chairman and CEO Steve Shank (who founded the company in 1993) owns 21% of the company. Jake Reynolds from TCV has recently joined the Board, and made a $35 million investment. Existing Capella shareholder Maveron, a leading venture capital firm focused on the convergence of consumers and technology, also made an incremental investment of $7.5 million, led by Jody Miller, Maveron venture partner and Capella board member. TCV and Maveron purchased shares from existing Capella investor Forstmann Little & Co., which sold a portion of its funds’ holdings, affirming a recent trend of later stage / private equity funds providing exits for earlier stage investors. Forstmann Little & Co. has been an investor in Capella since 2000 and has realized substantial gains on its holdings.

Capella has filed to go public. Revenues grew from $35 Million in 2002, to $82 Million in 2003, and in 2004 hit $118 Million (with $19 Million in profit).

Not bad at all! India’s NIIT has been a grand success, as has the Apollo Group (Nasdaq: APOL), with 2004 revenues of $1.8 Billion.

Capella is a good indicator that certain education plays are well worth investing in!