University payments processor Higher One files for $100 million IPO

Higher One files for $100 million IPO

NEW YORK — Higher One Holdings Inc. is planning an initial public offering of up to $100 million, even as pending legislation could change its business.

The New Haven, Conn., company processes financial aid payments and provides banking services for colleges and their students.

The company said late Wednesday in a filing with the Securities and Exchange Commission that it had higher education customers in 46 U.S. states and plans to increase the number of educational institutions it services. Higher One competes with student lenders such as SLM Corp., commonly known as Sallie Mae, and banks active in the higher education market such as Wells Fargo & Co.

The company said that 88 percent of its revenue in 2009 came from ATM fees and other banking services fees. Legislation aimed at protecting consumers in Congress could impact Higher One’s revenue. The U.S. Senate is considering a financial overhaul bill that includes a consumer watchdog.

Higher One also said that if the U.S. eliminates the financial middleman in student lending, its prospects for future growth could be affected. The government is on the verge of stripping banks of their ability to originate student loans in favor of direct government lending. The student lending legislation is included in amendments to the health care overhaul enacted earlier this week.

Higher One plans to use proceeds from the IPO to pay down debt due at the end of 2010 and for some of the costs of a recent acquisition. It will use remaining proceeds for possible acquisitions and general corporate purposes.

In 2009, its profit more than doubled as revenue grew 72 percent to $75.5 million.

Higher One did not say how many shares it planned to sell, what price it hoped to get for them or when it planned to go public.

It did not say what symbol it planned to list under on the Nasdaq.

The lead underwriter is Goldman Sachs.