SEBI allowed investors other than anchor buyers to withdraw their bids for Ruchi Soya Industries Ltd.‘s share sale citing misleading advertising, a rare such action by India’s market regulator.
The Securities and Exchange Board of India held a meeting with representatives of book running lead managers over unsolicited SMSs advertising the follow-on public offer of Ruchi Soya, the regulator said in a notice. “…prima facie the contents of which appear for be misleading/fraudulent and not in consonance with SEBI (ICRD) Regulations, 2018,” it said.
The regulator allowed all investors except anchor buyers to withdraw from the issue between March 28 and 30.
SEBI asked the company to inform all investors and stock exchanges about the withdrawal window. It also ordered the Patanjali Group-owned edible oil maker to issue advertisements in the same manner as the FPO in the same newspapers to caution investors against the unsolicited SMSs.
This is not the first time the FPO has come under SEBI scrutiny for misleading communication. In October 2021, the securities market regulator found company director Ramdev marketing the FPO to a group of followers as a ‘Mantra for becoming a Crorepati’. It issued a warning to the company that such communication is against regulations.
Ruchi Soya’s Rs 4,300 follow-on public offer was subscribed 3.6 times on the final day on Monday.
The edible oil maker’s FPO was oversubscribed as it garnered bids for 17.60 crore equity shares against the 4.89 crore shares on offer, according to data on the BSE. The company is raising capital via fresh equity to prepay debt.
Non-institutional investors’ portion was subscribed 11.75 times, while the shares set aside for retail investors were subscribed 0.9 times, according to its exchange filing. The allocation for qualified institutional buyers was subscribed 2.20 times, while employees bid for 7.76 times the shares on offer for them.