ABS- and Norwest-backed Rosetta Stone files $115m IPO

The private equity-backed developer of the popular language learning software will use the proceeds to repay $12m debt. Rosetta recently inked an endorsement deal with several US Olympic athletes, including swimming champion Michael Phelps.

Language education software maker Rosetta Stone, majority owned by private equity firms ABS Capital Partners and Norwest Equity Partners, has filed for a $115 million (€79 million) public float.  

Baltimore-based ABS currently owns a 46 percent voting stake in Rosetta Stone, while Minneapolis-based Norwest owns 30 percent. The two firms co-led a management buyout of the software maker in January 2006 that was reportedly worth $62 million.

ABS general partner Laura Witt subsequently became chairman of Rosetta’s board of directors, while ABS managing general partner Phillip Clough and Norwest managing partner John Lindahl also gained board seats.

The Virginia-based company intends to list on the New York Stock Exchange under the symbol RST, and will use the proceeds of the initial public offering to repay outstanding debt of roughly $12 million, it said in a Securities and Exchange Commission filing yesterday. Rosetta said it will not pay any cash dividends on the stock “in the forseeable future”.

Although Rosetta did not disclose any details as to an expected share price or listing date, Rosetta Stone

Phelps: Rosetta


could wait months without penalty to debut.

The filing comes at a time when many the public markets have expressed a keen distaste for new IPOs, causing many venture capital and private equity-backed firms to delay or withdraw the listings of portfolio companies.

Earlier this month, Pequot Capital- and CMEA Ventures-backed Codexis withdrew its IPO.

In one of the more recent illustrations of public market hostility, Oaktree Capital and GIF Investments-backed GT Solar went public in July with a $500 million IPO priced at $16.50 per share. At the end of its first day of trading, the solar energy company’s stock had dipped 12 percent.

ABS and Norwest declined to comment.

Rosetta offers 31 technology-enabled language education programs. Its customer base consists primarily of individuals but also includes institutional clients such as the US armed forces, educational instiutions, government agencies and corporations.

The company has grown its revenue from $15.5 million in 2003 to $136.3 million last year, according to the SEC filing.