Ruchi Soya, owned by Patanjali Ayurved, managed to receive approval from the market regulator to raise Rs. 4,300 crores via a follow-on public offer or FPO. The said follow-on public offer will be launched to fulfill SEBI’s norm of at least 25% public shareholding in a listed company.
Here’s more on this development.
So, What’s the Primary Objective of this FPO?
Did you know?
Patanjali Ayurved had acquired Ruchi Soya in 2019 through an insolvency process worth Rs. 4,350 crores.
This leading edible oil firm intends to use the FPO proceeds in these ways:
- It will use 60% of the proceeds to lower its existing debt
- 20% of the proceeds from FPO will be used to address working capital requirement
- The remainder will be used to account for general corporate purposes
As per the latest reports, it is expected that the FPO is planned in a way that will ensure a well-balanced share pricing for both existing and prospective stakeholders.
This company has appointed Axis Capital Ltd., ICICI Securities Ltd., and SBI Capital Markets Ltd. as the FPO’s lead managers.
How will Patanjali Benefit from this FPO?
Per SEBI’s norms, a company has to dilute promoters’ stakes to meet the minimum public shareholding portion of 25%.
Currently, Patanjali holds 99% of Ruchi Soya’s stake. In the said FPO, the company promoters will be able to dilute only a minimum of 9% of their stake. So as per SEBI’s rules, Patanjali has another 3 years to lower its shares by 75%.
Keep a close tab on its recent developments to find out when and how the company meets SEBI’s guidelines.
It has become a well-established fact that an FPO enables companies to price their shares freely. Accordingly, the same could be priced at a sharp difference from its market price. This FPO will help Ruchi Soya boost its public float. It will also prove to be a step ahead in helping Patanjali meet SEBI’s 25% public shareholding norm.
Prospective investors who are intrigued by the prospects of Ruchi Soya and Patanjali should keep an eye on the recent developments of this company in general.
To get all the latest updates about the IPO and FPO news, keep an eye on Angel One blogs.
Frequently Asked Questions
- When was Ruchi Soya relisted on the stock exchange?
On 27 January 2020, Ruchi Soya was relisted on the stock exchange at Rs. 16.10 price per share. On 29 June 2021, its shares soared to 1 year high of Rs. 1,535.
- What is Patanjali Ayurved’s stake in Ruchi Soya?
Patanjali Ayurved holds 98.9% stake in Ruchi Soya Industries Ltd.
- When will Patanjali Ayurved IPO be launched?
Currently, the company is focusing on Ruchi Soya FPO. However, it is expected that the initial public offer of this company is in the pipeline.