With the proposed FPO, Ruchi Soya hopes to raise fresh capital and bring in more public shareholders to meet Sebi norms that mandate listed firms to have at least 25% public shareholding
Edible oil producer Ruchi Soya Industries Ltd, owned by Ramdev’s Patanjali Ayurved group, is planning to sell fresh shares through a follow-on public offer (FPO) to cut promoter shareholding as mandated by the markets regulator, said two people aware of the development.
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.
The process resulted in Patanjali owning 98.9% of the company, leaving very little public float in the stock market.
With the proposed FPO, the company hopes to raise fresh capital and bring in more public shareholders to meet Securities and Exchange Board of India (Sebi) norms that mandate listed companies to have at least 25% public shareholding.
“They are working on the offer document for the FPO. Investment banks SBI Capital, ICICI Securities and Axis Capital are advising them on the transaction," said one of the people cited above, requesting anonymity.
The proposed sale is likely to see the company issue fresh shares worth ₹3,000-4,000 crore, said the second person.
“The public float is very low, so the stock price soared post relisting of the company after it came out of the bankruptcy resolution process. The FPO route is beneficial for them over selling shares to institutional investors in, say, a QIP because it allows for a more free pricing regime as against a QIP, which has a rigid Sebi pricing formula. And since it is open to a wider class of investors, the float will also improve significantly, and there will be better price discovery in the secondary market," said the second person.
Ruchi Soya’s shares relisted on 27 January 2020 at ₹16.10 apiece and went on to hit a one-year high of ₹1,535 on 29 June. On Wednesday, its shares closed at ₹1,073.55, down 4.71%, on BSE.
The funds from the FPO are likely to be used to cut debt and fund expansion, he added.
Calls and text messages sent to a Patanjali spokesperson did not elicit a response. ICICI Securities declined to comment. Mails sent to SBI Capital and Axis Capital did not elicit a response.
For the quarter ended December, Ruchi Soya posted revenue of ₹4,475.6 crore, up 20% from a year ago, and reported an Ebitda of ₹351.71 crore, up 76.7%, with Ebitda margin widening 2.52 percentage points to 7.86%.