Ruchi Soya gets Sebi approval for FPO
Edible oil producer Ruchi Soya Industries Ltd, owned by Ramdev’s Patanjali Ayurved group, has received the market regulator Securities and Exchange Board of India’s (Sebi) approval for its plans to sell fresh shares through a follow-on public offer (FPO) to pare debt and to cut promoter shareholding as mandated by the markets regulator, said a person aware of the development.
“The approval came in on Saturday,” the person said.
With the regulator’s approval in hand, the company is looking to launch the share sale soon, as early as next week, he added.
“They are in a rush to launch. The pricing will be finalized close to the launch date,” he said.
Ruchi Soya has filed a draft prospectus with the Sebi for a ₹4,300 crore FPO to raise fresh money.
While Ruchi Soya is a listed company with a discovered price in the market, an FPO allows a company to price its shares freely and thus, it may be priced at a sharp difference from the market price.
Patanjali had acquired the erstwhile bankrupt firm known for the Nutrela brand of products in 2019 for around ₹4,350 crore through an insolvency and bankruptcy code (IBC) process.
Ruchi Soya’s shares relisted on January 27, 2020 at ₹16.10 and soared to a one-year high of ₹1,535 on June 29, largely on account of its extremely small public float. On Friday, its shares closed at ₹1,125, up 1.25%, on BSE.
In an interaction with Mint in July, Ramdev had said that the pricing of the shares is well-balanced from the perspective of both existing and incoming shareholders.
“We will ensure that the price is well-balanced from the perspectives of both our existing shareholders and the new investors that will be coming into the FPO. We have done all the preparations, we have submitted to Sebi all the materials they have asked for, and we are hoping for the approval to come soon,”
Ramdev said in an interview. “We already have a lot of interest from investors,” he added.
The FPO will help the firm increase the public float, taking a step forward to meeting Sebi’s minimum public shareholding (MPS) norm of 25%.
Currently, the company needs to increase public shareholding by only 9% to meet the MPS requirement and the remaining 15% is required to be completed by December 2022. However, after utilizing the 20% uptick in offer size as permissible under regulations, the FPO is expected to ensure compliance of 15-20% public shareholding requirement, the company had told Mint.
Proceeds from the FPO will be used mainly to reduce Ruchi Soya’s debt, with around 60% of the capital planned to be used for that purpose, with another 20% earmarked for working capital use and the rest 20% for other general corporate use.
“We want to make the company debt-free. The target is to become debt-free in the next two to three years,” Ramdev told Mint in the interview.