Shares in IDP Education surged more than 20% yesterday after the struggling group raised a lot more money than originally planned.
The shares surged more than 27% to end the day at $14.75 – a rise made even better by the slide in the wider market.
IDP raised $225 million as part of its fully underwritten institutional placement, issuing 21.1 million new shares at $10.65.
That means shareholders who took the issue (big shareholders that is) are already looking at 30% plus return in a day – and the shares don’t settle until Monday, April 6.
The raising was larger than the $175 million amount initially targeted by the company on Wednesday, something it said was driven by “significant demand” from domestic and global investors
The new securities are scheduled to begin trading next Tuesday, April 7.
“We are very pleased with the strong level of support from our shareholders, as well as other investors,” said Peter Polson, IDP Chairman.
“The prudent operational and capital measures we announced will ensure that we are well placed to navigate through the current period of uncertainty.”
IDP will now make an issue to retail shareholders offering up to $30,000 worth of shares at the issue price.
IDP says it will accept unders or overs in the non-underwritten share purchase plan.
Given the surge yesterday in the share price, retail shareholders will be encouraged to take up their offers.
Kathmandu has completed the institutional component of its deeply discounted $200 million capital raise, raising gross proceeds of around $NZ154 million ($150 million).
The company said 96% of institutional investors took up their full entitlement in the 1 for 1.2 shares offer, bar the 16% shareholder Briscoe Group, which told the company on Wednesday it would not participate.
Shares were priced at a deep 50% discount to the company’s current trading price.
The retail component of the capital raise will open on Monday.
Kathmandu’s shares on the New Zealand stock exchange have tumbled 35.7% to 72 NZ cents yesterday, though its Australian shares will not begin trading again until tomorrow.
Kathmandu CEO Xavier Simonet said in the April 1 announcement of the issue the company’s first-half results demonstrated the strong position it would have been in “had the COVID-19 pandemic not occurred”.
“The board is taking pre-emptive action with the capital raising … to ensure our group remains strongly capitalised during the current market uncertainties,” he told the ASX on Wednesday.
“The proceeds of the equity raising will be used to deleverage the group’s balance sheet and provide liquidity and funding in the medium term should we experience a prolonged global COVID-19 pandemic.”
Kathmandu was forced to shut down stores and stand down more than 2,000 staff across Australia, New Zealand and other countries where RipCurl trades because of increasing coronavirus restrictions.