Baba Ramdev’s Ruchi Soya gets SEBI approval to launch FPO of Rs 4,300 crore
The Securities and Exchange Board of India (SEBI) has given approval for Ruchi Soya’s application for a Follow-on Public Offer (FPO).
- Republic Business
- 2 min read
In a bid to generate more revenue, Baba Ramdev-led Patanjali Ayurveda is gearing up to launch a Follow-on Public Offer (FPO) by next week. The Securities and Exchange Board of India (SEBI) has given approval for Ruchi Soya’s application for a Follow-on Public Offer (FPO). SEBI has approved the request to raise Rs 4,300 crore by selling shares in the stock market. On Monday, Pantanjali's Ruchi Soya shares closed at Rs 1,123.05 per share after jumping over 63% last year. It is pertinent to mention that Patanjali had started the company two years ago through the insolvency and bankruptcy code (IBC) process. The net worth of Ruchi Soya was Rs 4350 crore back then.
On January 27, 2020, the company made a comeback at Rs 16.10 and reached a peak of Rs 1525 on June 29, only because of low free float. According to experts, the FPO price of the company may come at a major discount in the stock market this year. The FPO can increase its public float and is expected to rise in the future. Considering the SEBI norms, Ruchi Soya will be required to attain the minimum public shareholding (MSP) requirement of 25% by the end of December this year. This norm will force the promoters to dilute a minimum 9% stake in the FPO. The promoters group currently holds a 98.9% stake in Ruchi Soya.
Ruchi Soya FPO: How will FPO funds be utilised?
- According to media reports, around 60% of the funds generated from EPO will be used to cut off the company's debt,
- The other 20% of funds generated from public offerings will be used to strengthen the working capital,
- The remaining 20% will be utilized for general corporate use.
Ruchi Soya holds a major stake in the palm and soya segments in India. it is one of the leading edible oil companies in India. Ruchi Soya manufactures products in partnership with brands like Mahakosh, Sunrich, Ruchi Gold, and Nutrela. In a bid to expand its reach and product portfolio, Ruchi Soya Industries acquired the biscuit business from Patanjali Natural Biscuits Pvt Ltd (PNBPL) for sale worth Rs 60.2 crore in May this year.