The Securities and Exchange Board of India (SEBI) has approved Ruchi Soya’s application for a Follow-on Public Offer (FPO). The market regulator has approved the draft document of the company, owned by the Baba Ramdev-led Patanjali Ayurveda, for an FPO of up to Rs 4,300 crore, said a source close to the development.
Ruchi Soya may launch the FPO by next week.
In June, the edible oil company had filed a draft document with SEBI to launch a follow-on public offer (FPO) to raise up to Rs 4,300 crore.
Minimum shareholding norm
This FPO is being launched to meet SEBI’s minimum public shareholding norm of 25 per cent in a listed entity, under the Securities Contract (Regulation) Rules, 1957.
In line with this norm, the promoters have to dilute a minimum 9 per cent stake in this round. The promoter group holds a 98.90 per cent stake in the company.
As per SEBI’s minimum public shareholding norms, the company needs to lower the promoter stake to achieve the minimum public shareholding of 25 per cent in compliance with the listing requirement. The company has time until December 2022 to dilute its stake to 75 percent.
How the funds will be used
Reports suggest that 60 percent of the FPO will be used mainly to pare Ruchi Soya’s debt, while 20 percent will be used for working capital and another 20 percent for general corporate use.
In 2019, Patanjali Ayurveda acquired Ruchi Soya through the insolvency process for Rs 4,350 crore. Ruchi Soya primarily operates in the business of processing of oilseeds, refining of crude edible oil for use as cooking oil, as well as manufacturing of soya products and value-added products.
The company has an integrated value chain in the palm and soya segments and a farm-to-fork business model. It has brands such as Mahakosh, Sunrich, Ruchi Gold and Nutrela in its stable.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
