Winners of the Rosetta Stone IPO

Hard to believe but there was actually a successful venture-backed IPO yesterday–the first in many months.

Rosetta Stone, a profitable and fast-growing maker of language software, went public. The shares priced at $18, above the offering range, and closed the first day at $25.

Rosetta Stone sold 6.25 million shares, raising $112.5 million. After the first day close, Rosetta was worth about $315 million.

Investors’ embrace of Rosetta Stone stands in contrast to the reception given Tuesday to college operator Bridgepoint Education Inc, which had to shave 30 percent off its estimated price to get its IPO to the market.

The two largest shareholders of Rosetta are ABS Capital Partners, a late stage growth equity firm; and Norwest Equity Partners, large private equity and growth investment firm.

Before the offering, ABS owned 46% of Rosetta and Norwest owned 30%. In January 2006, to get the company off the ground, ABS ponied up $29 million and Norwest invested $19 million.

Those investments have paid off handsomely. ABS’s 46% stake is worth about $145 million, while Norwest’s stake is worth about $95 million. So they each made about five times their money in 3 years. Not too shabby in this environment.


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