Time For Tofu
Patanjali-backed Ruchi Soya Industries is all set to raise Rs1,290 crores from a bunch of anchor investors, ahead of its follow on public offering (FPO).
An FPO is like an IPO, in the sense that companies use it to raise money from the public. The difference is that the company is already publicly listed and has had an 'initial' public offering (IPO).
The case of Ruchi Soya is actually quite interesting. Here's a quick recap:
Ruchi Soya Industries, one of India’s largest producers of edible oil went bankrupt and Patanjali Ayurveda acquired it via the NCLT-led insolvency process in 2019. They paid banks Rs 4,350 crores for the company in late 2019. (Interestingly, Patanjali borrowed Rs 4,000 crores from the same banks to pay for the deal!)
Soon after this acquisition, the stock price of Ruchi Soya started going up. Virtually 5% every day (which was the daily limit). And this continued for quite a long time.
In fact, even when the pandemic fear was at its peak in 2020 and the stock market was crashing, Ruchi Soya’s shares still kept going up and up and up.
The company’s market value went 90x from ~Rs 500 crores (when Baba Ji's Patanjali acquired it) to Rs 45,000 crores in June 2021. Right now, it’s around Rs 27k crores and they’ve decided to sell a small part of it to raise Rs 4,300 crores.
Patanjali owns 98% of the company, and as per SEBI rules they have to gradually bring this down to 75%.
So with this FPO, the promoters, ie Patanjali is trying to reduce its stake by 9%.