Bright Horizons Surges in Debut After IPO Prices Above Range

Bright Horizons Family Solutions Inc., the provider of child-care services to clients such as Pfizer Inc. and Starbucks Corp., surged in its debut after raising $222 million in an initial public offering.

The shares advanced 29 percent to $28.32 as of 4 p.m. in New York. Bright Horizons sold 10.1 million for $22 each, according to a statement. The Watertown, Massachusetts-based company earlier offered them for $19 to $21.

Today’s closing price gives Bright Horizons an enterprise value of $2.49 billion, or about 17 times earnings before interest, taxes, depreciation and amortization in the 12 months through September, data compiled by Bloomberg show. That compares with about 20 times for WageWorks Inc. (WAGE), the human- resources services provider to large corporations that went public last year, the data show.

Bright Horizons is seeking to harness the increasing need for companies to provide child-care services to employees as about 64 percent of mothers with children under the age of 6 participate in the workforce, Chief Executive Officer David Lissy said in an online video of an IPO road show presentation. With about five times the market share of its next-largest competitor in a fragmented industry, Bright Horizons plans to use small acquisitions to help expand, Lissy said.

Bain Capital

Bain Capital LLC, which took Bright Horizons private in a 2008 leveraged buyout, will own 80 percent of the company’s common stock after the IPO, a stake worth $1.46 billion at today’s close, according to data compiled by Bloomberg. That’s more than double the $640 million equity investment Bain made in the buyout, which was completed in May 2008. The Boston-based private-equity firm didn’t plan to offer stock in the IPO.

Ebitda at Bright Horizons in the year through Sept. 30 totaled $149.9 million, regulatory filings and data compiled by Bloomberg show. Sales (BFAM) in the nine months through September increased 10 percent from a year earlier to $797.5 million.

WageWorks, the San Mateo, California-based company that helps people set aside pretax wages to pay for health-care and commuting expenses and counts Fortune 100 companies such as Ford Motor Co. and Morgan Stanley among its clients, had an enterprise value of $343 million and Ebitda of $17.6 million in the 12 months through June 30, according to its regulatory filings. The stock has more than doubled since its May debut.

Child-care companies that Bright Horizons names as competitors in its filings, such as Portland, Oregon-based Knowledge Universe Education LLC and Children’s Choice Learning Centers Inc. of Richardson, Texas, aren’t publicly traded.

Bright Horizons is listed on the New York Stock Exchange under the symbol BFAM. Goldman Sachs Group Inc., JPMorgan Chase & Co. and Barclays Plc led the offering, in which about 16 percent of the company’s shares were sold.

To contact the reporter on this story: Lee Spears in New York at lspears3@bloomberg.net

To contact the editor responsible for this story: Jeffrey McCracken at jmccracken3@bloomberg.net

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.