The Securities and Exchange Board of India (Sebi) on Monday asked Ruchi Soya Industries to give the option to the investors in the follow-on public offer (FPO) to withdraw their bids due to “circulation of unsolicited SMSs advertising the issue”.
In a directive to the investment bankers to the issue, the regulator has said prima-facie the contents of the unsolicited SMS appear to be “misleading/fraudulent” and “not in consonance” with Sebi regulations. The window for withdrawal will be available on March 28-30, 2022.
According to the Sebi notice, an SMS is to be sent to all the applicants of the received bids, informing them of the additional window of withdrawal. “A notice to investors shall be issued in the form of an advertisement in the newspapers, which will be issued on March 29 and March 30, 2022,” it said.
The company’s FPO, which closed on Monday, garnered 3.6 times subscription, including 0.9 times of retail subscription. Patanjali Ayurved-owned Ruchi Soya had last week hit the capital market to raise Rs 4,300 crore through its FPO as it aims to become a debt-free company. The price band has been fixed at Rs 615-650 per share. It had raised Rs 1,290 crore from anchor investors ahead of its FPO.
Sebi has in the past cautioned investors that unsolicited messages containing stock tips/investment advice with respect to listed companies are increasingly being circulated through bulk SMS, websites and social media platforms like WhatsApp and Telegram. Such messages are sent to investors and general public usually recommending to deal in specific stocks of listed companies, indicating target prices and giving fraudulent, misleading and false information relating to listed companies, inducing them to deal in these stocks, Sebi had said.
Patanjali, promoted by Baba Ramdev, acquired Ruchi Soya, which is listed on the stock exchanges, through an insolvency process for Rs 4,350 crore in 2019. After the FPO, Patanjali’s holding in Ruchi Soya will come down to about 81 per cent, and the public will hold about 19 per cent. Currently, it owns 98.9 per cent in Ruchi Soya.
The company is into fast-moving consumer goods (FMCG) and fast-moving health goods (FMHG) and owns brands such as Mahakosh, Sunrich, Ruchi Gold and Nutrela. The FPO is to meet Sebi’s requirement of minimum public shareholding of 25 per cent in a listed entity.
Ruchi Soya’s anchor investors include the likes of Aditya Birla Sun Life Mutual Fund, AG Dynamics Funds, Alchemy Capital, ASK MF, HDFC Life Insurance Company, Kotak MF, Quant MF, SBI Life Insurance Company, Societe Generale, BNP Paribas, The Sultanate of Oman Ministry of Defence Pension Fund, UTI MF, Yas Takaful PJSC and UPS Group among others.
The company plans to utilise the net proceeds of the FPO for repayment and/or prepayment of borrowings, funding incremental working capital requirements and general corporate purposes, according to the information provided in the red herring prospectus (RHP).