Does SEBI allows investors to withdraw bids in Ruchi Soya FPO?
Ruchi Soya Industries, a subsidiary of yoga teacher Baba Ramdev’s Patanjali Group, has recently been involved in a dispute with India’s securities regulator, the Securities and Exchange Board of India (SEBI).
Ruchi Soya Industries was ordered by the Securities and Exchange Board of India to give investors who subscribed to the firm’s follow-on public offer until Wednesday to withdraw their bids, citing the circulation of “unsolicited SMSes.” On Monday, the issue was closed.
The market regulator discovered a company operated by Baba Ramdev, sending its customers, encouraging them to buy Ruchi Soya’s shares through its FPO.
“Great news for all devoted members of Patanjali Parivar.” Patanjali Group is a wonderful investment opportunity. Ruchi Soya Industries Ltd, a Patanjali Group firm, has launched a follow-on public offer (FPO) for retail investors.
“All investors/bidders (excluding anchor book participants) will have the opportunity to withdraw bids,” according to Sebi.
Not only did SEBI allow investors to withdraw bids, but it also ordered the FPO’s lead banking managers to publish a notice to all investors in the form of newspaper advertising on Tuesday.
SEBI also recommended that the procedure for application withdrawal be included in the newspaper. SEBI took such a severe stance to protect investors from being duped into investing.
All candidates have also received an SMS reminding them of the additional opportunity for withdrawing their bids. Ruchi Soya, a subsidiary of Patanjali Ayurved Group, sold its shares for Rs 615-650 each, to meet Sebi’s minimum public holding requirements. Patanjali owns 98.9% of Ruchi Soya, which it bought after the company went bankrupt.
According to market players, and SMS allegedly sent to Patanjali clients stated that the Ruchi Soya FPO was a fantastic investment opportunity with a 30% reduction off the market price.
So far in FY22, 51 companies have raised a total of Rs 1.15 lakh crore through public offerings, compared to Rs 81,553 crore raised by 45 companies in FY18.
Ruchi soya FPO-
The corporation created the FPO to pay off a large debt and, as a result, reduce promoter interest in the company by SEBI regulations.
The company is one of the most well-known fast-moving consumer goods (FMCG) brands in the Indian edible oil industry, as well as one of the largest soya food producers.
They (Ruchi Soya) are currently working on re-establishing the price, they are mature enough to get out of such a position. But all of this could be a plot because they already know the regulations.
This isn’t the first time the FPO has been investigated by SEBI for deceptive communication. The Securities and Exchange Commission discovered firm director Ramdev promoting the FPO to a group of followers as a “Mantra for Becoming a Crorepati” in October 2021. It issued a warning to the corporation, stating that such communication is prohibited under the law.
According to Vikram Kasat, “SEBI met with representatives of the book running lead managers over unsolicited SMSs advertising the follow-on public offer of Ruchi Soya — prima facie the contents of which appear to be misleading/fraudulent and not following SEBI (ICRD) Regulations, 2018.”
Ruchi soya clarification–
However, Ruchi Soya Industries’ stock rose 15% after investors in the company’s Follow-on Public Offer (FPO) were permitted to withdraw their bids, according to the market regulator SEBI. Meanwhile, the extension of the FPO, which was purely for withdrawing bids, caused some investors to get confused.
Ruchi Soya is principally engaged in the processing of oilseeds, the refinement of crude edible oil, and the production of soya products and value-added products. With a farm-to-fork business model, the company has an integrated value chain in the palm and soya divisions. Sunrich, Ruchi Gold, and Nutrela are some of the brands available. Patanjali bought Ruchi Soya, a publicly-traded company, in an insolvency procedure in 2019.
Ruchi Soya’s FPO was 3.6 times subscribed on the final day of bidding, March 28, with bids for 17.60 crore equity shares vs 4.89 crore equity shares. The retail quota, which accounts for 35% of the issue, has received a 90% subscription rate. Half of the offer has been set aside for qualified institutional buyers, with the remaining 15% designated for non-institutional investors. Their portions were 2.2 times and 11.75 times subscribed, respectively. Employees have bid for 77,616 equity shares out of a total of 10,000 designated for them. The deadline for submissions was March 28. The price range for each share has been set from Rs 615 to Rs 650.
Out of the total fundraising goal of Rs 4,300 crore, the Patanjali-backed company had already raised Rs 1,290 crore through the anchor book. Societe Generale, BNP Paribas, The Sultanate of Oman, Ministry of Defence Pension Fund, Yas Takaful PJSC (an Abu Dhabi-based insurance business), MK Cohesion, UPS Group, and Alchemy are among the foreign investors who obtained allocations under the anchor investor part of the FPO.
Patanjali Group’s stake in Ruchi Soya will drop to roughly 81 percent after the FPO, with the public retaining about 19 percent.