K12 shares up sharply, leading trio of US debuts

NEW YORK, Dec 13 (Reuters) - Online education provider K12 Inc LRN.P led a trio of companies listing their shares on U.S. exchanges on Thursday with a 37 percent surge.

K12, based in Herndon, Virginia, rose sharply a day after raising $108 million with an initial public offering that priced at the top of expectations.

Its shares opened at $19.75, almost 10 percent above the IPO price, and in afternoon trading went as high as $24.70 on the New York Stock Exchange's Pacific stock market, Arca.

Technology services company MedAssets Inc (MDAS.O: Quote, Profile, Research) also rose sharply in its market debut, climbing 30 percent on Nasdaq, while oil tanker operator Teekay Tankers Ltd TNK.N posted more modest gains, up 3.3 percent on the NYSE.

"K12 is in a growing market and so is MedAssets," said Francis Gaskins, president of research firm IPOdesktop.com. "People are looking at growth dynamics in this market; it is no longer enough to just look at the income statement," he added.

On Wednesday, K12 sold 6 million shares at $18 each, compared with a forecast range of $16 to $18 each, according to an underwriter.

The company creates "virtual classrooms" for students in the public school system from kindergarten through grade 12 -- hence the company name, K12. The company is active in 18 states and intends to expand its reach as quickly as possible, Chief Executive Ron Packard told Reuters.

Packard said the company has seen enrollment in its programs increase 260 percent from 2004 through the end of September, when enrollment stood at 39,500 pupils.

Proceeds from the offering will partly be used to pay down debt, to pay preferred share dividends and for general corporate purposes, according to an amended registration statement with the U.S. Securities and Exchange Commission.

For the period ended Sept. 30, K12's net income rose 63 percent to $12.8 million, and revenue grew 57 percent to $59.4 million. The company said it was not currently able to issue any forecast on future earnings growth.

MedAssets on Wednesday raised $212.8 million with an initial public offering that priced at $16 a share, at the top of a forecast range.

The Alpharetta, Georgia-based company, which provides technology aimed at improving financial metrics for health-care institutions, said it will use about three-quarters of the proceeds to pay down debt, and for general corporate purposes.

The company had debt of almost $330 million at the end of September, saddling it with high interest expense, but IPOdesktop's Gaskins said investors will tolerate higher costs when top-line growth can outpace costs.

PAYING DIVIDENDS

Shares of Bahamian oil tanker operator Teekay Tankers rose a modest 3.3 percent on Thursday, after it raised $195 million on Wednesday, selling 10 million shares for $19.50 each, again at the top of their forecast range.

The company has a policy of paying quarterly dividends and has a business plan in place to increase payments over time, drawing in investors pursuing a dividend-investment strategy, Gaskins said. (Reporting by Lilla Zuill, editing by Tim Dobbyn and Gerald E. McCormick)