- International study specialist IDP Education (IEL) has bumped an institutional share placement up by $50 million today
- The company announced the $175 million placement yesterday, which priced new shares at $10.65 each
- Today, due to strong demand from investors, IDP increased the size of the placement and raised $225 million
- The company has also launched a share purchase plan to raise another $15 million
- The cash will help IDP stay strong amid the COVID-19 crisis
- Shares in the company soared today, closing almost 30 per cent higher at $14.75 each
International study company IDP Education (IEL) shares have surged today after a bolstering an institutional placement by an extra $50 million.
The company announced the placement yesterday to fortify itself against the uncertainty of the COVID-19 pandemic. With travel bans and lockdowns increasing across the globe, IDP’s business — which focusses on helping students study abroad — is set to take some blows.
The original plan
To boost its balance sheet, IDP announced it would be tapping the market for $190 million; $175 million from institutional investors and $15 million from a share purchase plan for existing shareholders.
“COVID-19 is having a material impact on IDP and other organisations globally. However, IDP is taking decisive action to ensure we have sufficient liquidity to trade through the current situation,” IDP CEO and Managing Director Andrew Barkla said yesterday.
The company was set to price the new shares under the institutional placement at $10.65 each, which was a 7.9 per cent discount to their last closing price.
For the purchase plan, shares would be priced at a two per cent discount to the five-day volume-weighted average price up to the closing day of the plan.
“We have launched an equity raising today, along with an increase to our debt facilities and key operational initiatives, which include board and senior management pay cuts. This is to ensure that we are well-placed post-COVID-19 to take advantage of the substantial market opportunity,” Andrew explained.
The upgrade
It seems the institutions tapped to back IDP with their wallets believe the company will come out the other side strong, with the total amount raised in the placement bumped to $225 million today.
IDP told shareholder due to “significant demand from domestic and global investors”, the size of the placement was increased.
IDP’s Chairman, Peter Polson, chimed in today to show his gratitude to the investors.
“We are very pleased with the strong level of support from our shareholders, as well as other investors,” Peter said.
“The prudent operational and capital measures we announced will ensure that we are well placed to navigate through the current period of uncertainty. We are well-positioned to capture market opportunity and continue to deliver value for our customers and shareholders,” he said.
The share purchase plan is unchanged, though IDP said it may decide to accept applications amounting to more or less than the $15 million.
Following today’s vote of confidence from institutional investors, IDP shares performed inversely to the usual trend following a capital raise.
Rather than dipping to meet the discounted placement price, IDP shares surged 27.60 per cent ahead to close worth $14.75 each. The company has a $3.75 billion market cap.