Sebi directs Ruchi Soya to allow FPO investors to withdraw bids



The Securities and Exchange Board of India (Sebi) directed Ruchi Soya Industries to give the option to investors, who took part in the follow-up public offering (FPO), to withdraw their bids due to “trading of spam advertising issue”.


In a letter to the three investment bankers selling the shares, Sebi said at first glance that the contents of the SMS appeared to be “misleading/fraudulent” and did not comply with ICDR (Capital Issue and Disclosure Requirements) regulations.

The sources said that the short message contained forward-looking statements regarding the performance of Ruchi Soya’s share price to entice investors towards the issue. business standard The contents of the SMS allegedly circulated through the FPO could not be verified.


Ruchi Soya FPO, which closed on Monday, got a subscription 3.6 times. Industry experts said SEBI’s dictates to the company may delay the listing process and also increase the risk of a stock sale being overwritten if a large number of investors withdraw their bids.


“All investors/bidders (excluding those participating in the base book) shall be given the option to withdraw their bids. The withdrawal window shall be available on March 28, March 29 and March 30, 2022. Investors will be informed of the withdrawal procedures and will form part of the announcement being made.”


The qualified institutional purchaser (QIB) portion of the FPO was subscribed 2.2 times, the high-value individuals portion (HNI) 11.75 times and the employee portion approximately 7.8 times. Only the retail portion of the issue is 90 percent oversubscribed.


Market watchers say the regulator’s unprecedented action has raised doubts about the fate of the FPO, which was done to meet the minimum free-floating obligation.


Shares of Ruchi Soya fell 6 per cent on Monday to close at 815 rupees. The company has priced the FPO in the range between Rs 615 and Rs 650 per share – 20 percent – 25 percent lower than the previous close.


The Patanjali Ayurvedic company led by Baba Ramdev owns 98.9 percent of the shares of Ruchi Soya, while the public owns only 1.1 percent. After the FPO, Patanjali’s contribution is expected to decrease to 81 per cent, while the public contribution will rise to 19 per cent. This move could have helped in better price discovery.


This isn’t the first time the company has had trouble with the regulator.


In October 2021, Sibi warned the yoga expert and the company against making questionable investment promises.


In a viral video, Ramdev is seen asking his followers to buy shares in Ruchi Soya Industries if they want to become crorepatis.


“In the video, Shri Ramdi, one of the directors of the issuer, is observed addressing a gathering at a Yoga Shavers or Yoga Mitts. In his speech, he is noted as marketing an FPO for Ruchi Soya Industries and in his own words describing the investment as a ‘mantra to become a Crorepati.’” It should be noted. indicated that the address referred to falls under the heading “Public Communication” as shown in Schedule IX of the SEBI Regulations (ICDR), 2018. The address attached by one of the directors of the issuing company appears to be inconsistent with the letter addressed to Ruchi’s board of directors, Sebi said in the letter to the Ruchi Board of Directors. Soya, where Ramdev serves as a non-executive director.


The said clause states that any communication by a company planning to take advantage of the public markets must contain only the information contained in the draft offer document. It also stipulated that “any general information related to the subject may not include any offer of incentives to investors, whether directly or indirectly, in any way, whether cash, in-kind, services, or otherwise.”


At the time, Ramdev and the company had just escaped a warning.


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