Home / Markets / Ipo /  Retail investors can scrap Ruchi FPO bid

MUMBAI : Retail investors who have submitted bids for Ruchi Soya Industries Ltd’s 4,300 crore follow-on public offering can choose to withdraw their applications during 28-30 March, in a rare such step by the Securities and Exchange Board of India (Sebi).

The market regulator’s move followed instances of unsolicited messages being sent to Patanjali Ayurved Ltd’s users to invest in the said offer.

“Great news for all beloved members of Patanjali parivar. A good investment opportunity in Patanjali Group. Patanjali Group company—Ruchi Soya Industries Ltd—has opened the follow-on public offer(FPO) for retail investors. The issue closes on 28 March 2022. This is available in the price band— 615-650 per share , i.e., discount of about 30% to market price. You can apply for shares through your bank/ broker/ ASBA/UPI in your demat account," according to the unsolicited message, a copy of which was seen by Mint.

Sebi directed the lead banking managers to the FPO to issue a notice to all investors in the form of newspaper advertisements, cautioning them about the circulation of such unsolicited SMSes, on Tuesday and Wednesday.

The follow-on offer opened on 24 March and closed on Monday, as the company looked to become debt-free and also comply with Sebi’s requirement of increasing minimum public shareholding to 10%.

Public shareholding in Ruchi Soya stood at 1.10% in the quarter ended 31 December.

Sebi said the procedure for withdrawal of applications by investors should be disclosed as part of the advertisements.

Additionally, the market regulator has asked the bankers to immediately notify the stock exchanges on circulation of such unsolicited SMSes. This disclosure should clearly state the information pertaining to the window of the withdrawal available to the investors in the ongoing FPO.

An SMS has to be sent to all the applicants whose bids have been received, informing them about the additional window provided to withdraw their bids, the regulator directed.

“As per the regulatory norms, an offer cannot be made without referring to an offer document which the unsolicited SMS did. The company also cannot proactively specify about the discount offered, since that is not precise in reality. In addition, the company as per the message cannot claim that the offer is a “good investment" unless verified by an independent source. More importantly, the company also has to adhere to Sebi’s publicity guidelines while circulating such messages on the offer," said a person with direct knowledge of the matter.

The FPO of Baba Ramdev-led Ruchi Soya was subscribed 3.8 times on the final day of bidding. Shares of Ruchi Soya closed 5.96% lower at 815.05 on Monday on the BSE, widely underperforming a 0.4% rise in the benchmark index.

Swaraj Singh Dhanjal contributed to the story

ABOUT THE AUTHOR

Priyanka Gawande

Priyanka Gawande is a senior legal correspondent at Mint. She has worked as legal reporter for four years with both television and digital mediums. Based in Mumbai, she reports on disputes across sectors including banking, corporates and finance. This also includes insolvency and bankruptcy cases and intellectual property rights (IPR) litigation. Her focus also comprises tracking capital markets and disputes relating to securities law. Previously, Priyanka worked with Informist Media for 2.5 years covering major insolvency and bankruptcy cases and corporate developments. She started her career in journalism with Business Television India (BTVi) where she reported on primary markets, banking, finance and insurance companies.
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