Patanjali’s Ruchi Soya Set To Launch FPO In February Last Week

FPO of Ruchi Soya will ensure compliance with minimum public shareholding norms stipulated by the Sebi by substantially increasing the public float of the company, said experts

Ramdev's Patanjali Group acquired Ruchi Soya in December 2019 after the completion of IBC process. Image: Getty

New Delhi: Ruchi Soya Industries, a part of Patanjali Group, is in final stages of launching its follow-on public offering (FPO) in the last week of February, according to sources.

Market experts have said that the FPO of Ruchi Soya will ensure compliance with minimum public shareholding norms stipulated by the Sebi by substantially increasing the public float of the company.

The Draft Red Herring Prospectus (DRHP) available on the Sebi website states that the FPO is proposed to be by way of a pure fresh issuance of equity shares. The primary objects of such FPO are to bolster the financial condition of the firm by repaying or prepaying existing debt, self-funding incremental working capital requirements, and self-funding other general corporate purposes.

A legal expert has clarified that launching an FPO is more complicated and time consuming in comparison to a plain vanilla IPO. The source revealed that Ruchi Soya is required to comply with Listing Obligations and Disclosure Requirements (LODR) and also comply with Issue of Capital and Disclosure Requirements (ICDR) before launching a public issue.

Such compliance requirements usually complicate the situation and historically there have hardly been any FPOs hitting Indian Capital Markets, mostly due to this reason.

Given that Ruchi Soya has reportedly obtained all necessary approvals for the launch of FPO, this company will become the first Indian firm to hit the capital markets after a successful completion of the IBC process.

Ruchi was acquired by Patanjali Group in December 2019 after the completion of IBC process. Ruchi Soya is now being portrayed as a role model for other corporates vying for turnaround after the IBC process.