Ruchi Soya sells 51% stake for ₹4,000 cr

Edible oil maker Ruchi SoyaIndustriesLtdhasagreedto sell a 51% stake in the company along with its entire branded oil distribution business for ₹4,000 crore to private equity firm Devonshire Capital.

The company will use the funds to part repay its over ₹12,000 crore debt as of 30 June, Ruchi Soya said in stock exchangefilings.Thecompany’s boardapproved the decision in a meeting held on Thursday.

Approvals from Ruchi Soya’s creditors, the Securities and Exchange Board of India (Sebi), and the National Company Law Tribunal (NCLT) are pending.

Aspartofthedeal,RuchiSoya is selling its entire stake in wholly-owned subsidiary Mrig Trading Pvt. Ltd into which the company will spin off its branded oil distribution business, it said in a press statement.

“This strategic investment by Devonshire will enhance the valueofourbusinessandprovide an effective solution to resolve our outstanding issues with the banks, financial institutions and operational creditors,” Dinesh Shahra, managing director and CEO of Ruchi Soya, said in the statement.“Weareoptimisticon an early completion of this restructuring exercise after all necessary approvals of the lenders and legal formalities.”

A Ruchi Soya spokesperson declinedtocommentonthespecifics and timeline of the deal.

Ruchi Soya’s board set up a committee to look into restructuring options for its business, whichincludedspinningoffindividual businesses earlier this year,Mintreportedon6September.Itsprimarybusinessisedible oilsrefining,whichmadeup74% of its revenueinFY16-17, according to the company’s annual report.

“Thedealissubject to approvals, and so it’s not done yet,” Amarjeet Singh, country head, India,at DevonshireCapitalsaid in an interview. “We don’t comment on ongoing investment processes. We are looking at it, it’s an interesting company, there’s a long-term strategic value in it,” he said.

Thailand-based Devonshire Capitalfocusesonstressedassets in Asia, Singhsaid. “Wewereset up to look at stressed assets in South-east Asia and Greater Asia, this is going to be our first investment in India if it happens.”

RuchiSoyaiscurrentlynegotiating terms for debt resolution withits creditors evenasitisbattles insolvency proceedings in theNCLTwithlendersDBSBank andStandardCharteredBankfor pending repayments worth Rs184.38 crore, Mintreportedon 15September.RuchiSoyaispart ofthelistof26companiesthatthe RBIsenttobanksaskingthemto conclude a debt resolution process by December 13.

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