Ruchi Soya spurts 20%, hits upper limit on Rs 4,300 crore FPO announcement

FPO is being launched to meet the 25% minimum public shareholding (MPS) norm. Promoter shareholding is currently 98.9%

Shares of Ruchi Soya Industries hit the 20 per cent upper trading limit on Monday after the company announced plans to launch a Rs 4,300-crore follow-on public offering (FPO) next week.

The stock traded at Rs 964, valuing the Patanjali Ayurveda-led firm at Rs 28,530 crore.

In an announcement to the stock exchange, Ruchi Soya has said its FPO will remain open between March 24 and March 28.

The FPO is being launched to comply with the 25 per cent minimum public shareholding (MPS) requirement. The promoter shareholding of Ruchi Soya is currently 98.9 per cent.

The company had filed its draft red herring prospectus (DRHP) in June 2021 and obtained market regulator Securities and Exchange Board of India’s (Sebi’s) approval in August 2021.

The FPO will be an entirely fresh issue of shares and the promoter won’t be divesting any of their holdings.

In a press release, Ruchi Soya has said the promoter shareholding after the FPO could decline to 81 per cent, while public shareholding could increase to 19 per cent.

Ruchi Soya’s share sale will be the first major FPO since Yes Bank’s in July 2020.

Market players said the company will have to price the FPO at 10-15 per cent discount to the prevailing market price to entice investors.

Ruchi Soya is India’s largest player in the branded palm oil segment with a market share of 12 per cent.

In 2017, Corporate Insolvency Resolution Process (CIRP) was initiated against the company after it defaulted on loan payments. Patanjali had offered Rs 4,350 crore under the resolution plan, which was approved by the Committee of Creditors (COC) on April 30, 2019 and was implemented by December 2019.

As per the terms of Patanjali Resolution Plan, the existing share capital of the company was reduced by about 90 per cent.

SBI Capital Markets , Axis Capital and ICICI Securities are investment banks handling the share sale.