New Delhi: Ruchi Soya of Baba Ramdev, a subsidiary of Patanjali Ayurveda, is expected to launch a follow-on public offering (FPO) in the last week of February 2022. According to a report by Zee Business, the company aims to raise Rs 4,300 through the markets of capital.Also Read – Vedant Fashions IPO Allotment Today. Direct link to check award status here
Under the rules of the Securities Exchange Board of India (SEBI), a listed company must have at least a 25% stake in the public. The company is dating the FPO to meet this requirement. However, Ruchi Soya is already listed on the stock exchange. On Friday, Ruchi Soya closed at Rs 823.15 per share, 1.6% higher than the previous day. Also Read – LIC IPO: What We Know So Far
According to Zee Business, the company filed a draft Red Herring Prospectus (DRHP) in June 2021 and received the green light from SEBI to move forward with the FPO shortly thereafter. The company’s promoters currently own a whopping 99% stake in the company. Also Read – Stocks to Buy Today: 20 Stocks to Post Good Profits on Feb 11
For the uninitiated, Ruchi Soya, an edible oil company, was acquired by Patanjali from Ramdev in 2019 for around Rs 4,350 crore. It is already a listed company. From the 99% participation of the promoters, the company must reduce it to 75% in 3 years to meet the requirements of SEBI.
What is a follow-on public offering (FPO)?
After a company issues an initial public offering (IPO), it is listed on a stock exchange. But what if the company wants to further dilute its equity and raise more funds? This is where FPO comes in. In simpler terms, FPO is also known as secondary offerings.
The FPO allows an already listed company to offer new shares to investors. These are in addition to the shares issued at the time of the IPO. There are broadly two types of FPOs, dilutive and non-dilutive.
The dilutive FPO dilutes the equity of the existing promoters in the company. Non-dilutive FPO does not. Here, existing private shares are sold to the general public.