24 March 2022 is marked by Ruchi Soya to release its follow-on public offering. As per the news, an additional FPO will be issued after the initial public offering made by this diversified FMCG company. This act of FPO comes in to meet the requirements of SEBI, where a listed business should possess 25 percent of public shareholding. This move will reduce the stakeholding of Patanjali Ayurveda in Ruchi Soya. This public offering will help them raise funds to repay the outstanding debts and for other general corporate purposes.
More About the Follow-on Public Offering of Ruchi Soya Shares
The issue of follow on public offering by Patanjali Ayurveda-owned Ruchi Soya will start on 24 March 2022 and close on 28 March 2022. This FPO will offer equity shares with a face value of Rs. 2 each, which will help them raise funds of around Rs. 4,300 crores. Further, it privileges the eligible employees with a subscription process, where up to 10,000 equity shares are reserved for them. This FMCG company states that the size of follow on will be reduced upon completing the reserved 10,000 Ruchi Soya shares.
Why Is Ruchi Soya Floating This FPO?
Ruchi Soya made this move of a follow on public offering to meet SEBI’s (Securities and Exchange Board of India) rules. The market regulator has laid down a rule of 25 per cent requirement of public shareholding in listed businesses. To meet this requirement, Ruchi Soya will issue fresh shares in the form of an additional public offering.
What Is There in It for Ruchi Soya?
In the current scenario, 98.9 per cent stake of Ruchi Soya is owned by the Swami Ramdev’s Patanjali Group and the leftover 1.1 per cent is owned by the public. This FPO move will further increase the public shareholding to 19 per cent and bring down Patanjali Group’s stake to 81 per cent. With SEBI’s minimum shareholding rules, a 25 per cent stake of a business should be in possession of public shareholders. But according to Ruchi Soya, reducing the promoter’s stakeholding to 75 per cent might take about 3 years. Nevertheless, this FPO dilution will help raise funds and subsequently adhere to the minimum shareholding rules set by the market regulator.
Objectives of this Follow on Public Offering by Ruchi Soya
The objectives of this FPO are listed below.
- This will help the company to further its business.
- Raised funds through this offering will help them repay the outstanding loans.
- Further, this will help them meet the requirements of incremental working capital.
- These funds will also be used for general corporate purposes.
Ruchi Soya ranks amongst India’s major players in the soya food space and is accredited to launch the Nutrela brand in the 1980s. Moreover, the Ruchi Gold brand of Ruchi Soya is a market leader in the edible oil sector in India. After Patanjali bought it, Ruchi Soya benefitted from the countrywide distribution network that this Ayurveda company already possessed. Furthermore, after initial public sharing, they are now set to offer additional Ruchi Soya shares to the general public in follow-on public offering. This will help them maintain a strong presence in this fast-paced consumer goods sector.
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Source: Economic Times
Frequently Asked Questions
1. When will the Ruchi Soya FPO open for subscription?
Ruchi Soya’s FPO will commence on 24 March 2022 and close on 28 March 2022.
2. What is the FPO of Ruchi Soya?
Ruchi Soya intends to raise public shareholding from 1.1 per cent to 19 per cent through FPO, which is calculated to raise funds of Rs. 4,300 crores.
3. What is the difference between IPO and FPO?
IPO relays to a company’s initial sale of shares to the general public, and FPO is an additional offer of shares sale.
Disclaimer: This blog is exclusively for educational purposes and does not provide any advice/tips on investment or recommend buying and selling any stock.