Patanjali-owned Ruchi Soya planning FPO to raise fresh capital, cut down debt

Representative image of a store in Ahmedabad, India selling Patanjali Ayurved products. (Image: Reuters/Amit Dave)

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Ruchi Soya Industries. owned by Baba Ramdev's Patanjali Ayurved, will issue fresh shares through a follow-on public offer to reduce promoter shareholding as required by the Securities and Exchange Board of India (SEBI), two people aware of the matter told Mint.

After the acquisition of the edible oil producer in 2019, through an insolvency and bankruptcy code (IBC) process, Patanjali owned 98.9 percent of the company. However, SEBI mandates a listed company to have at least 25 percent public shareholding within 36 months of the acquisition which will be completed this year in June.

“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," one of the people cited above told Mint, requesting anonymity.

The proposed sale is likely to see the company issue fresh shares worth Rs 3,000-4,000 crore, the second person told the publication adding that the public float is very low, so the stock price soared post relisting of the company after it came out of bankruptcy resolution process.

The funds raised through FPO will be used to cut down on the debt, the report added.

"The FPO route is beneficial for them over-selling shares to institutional investors in, say, a Qualified institutional placement (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," the second person added.

Swami Ramdev, founder of Patanjali, in 2020 had expressed the intention to launch an FPO this year. The board resolution for the same was also passed at the time, PTI had reported.