Ruchi Soya FPO – All you need to know about FPOs and how to apply

• Shares of Ruchi Soya Industries have skyrocketed 36% in the last two trading days after the company announced a follow-on public offer.
• A follow-on public offer is a way of issuing funds for a stock exchange-listed company from its existing shareholders and investors.
• Here is a simple read on what FPO is and how to apply for it.
  

Ruchi Soya Industries, a part of the Patanjali Group, has announced on March 11, to raise ₹4,300 crore through follow-on public offer. The stock has skyrocketed 36% since then in the last two trading days.

The company is one of the leading fast moving consumer goods (FMCG) brands in the Indian edible oil sector and also one of the largest manufacturers of soya foods.

What is a follow-on public offer?
Follow-on public offer is a way of issuing funds for a stock exchange-listed company from its existing shareholders and investors. As the name suggests it follows up onto the initial public offering (IPO), where the company issues its shares to its public for the first time.

FPO is usually done when the listed company needs funds to grow their business or reduce debts.

But Ruchi Soya FPO is not usual as the company is coming up with an FPO majorly to cut down its promoter holding and raise public shareholding, which is currently not in line with market regulator’s, Securities and Exchange Board of India (SEBI), norms.

According to the regulator, the minimum requirement for a public shareholding in a listed company should be 25%. Currently, Patanjali owns 98.9% in Ruchi Soya while public shareholders own 1.1%. Post the FPO, Patanjali's shareholding in the edible oil manufacturer will reduce to 81% while public shareholding will increase to 19%.

Hence, the FPO will support Baba Ramdev’s Patanjali to meet the regulatory norms and cut down its shareholding.

The process of issuing the FPO is similar to IPO as the company has to submit a red herring prospectus (RHP) to SEBI for its approval.

The issue will open on March 24 and will be available for bidding till March 28, 2022.

Ruchi Soya plans to utilise net proceeds from the FPO for repayment of certain borrowings, incremental working capital requirements, and general corporate purposes.

The company is yet to announce the issue price of the FPO.

Steps to apply in Ruchi Soya FPO through Zerodha

1. Visit the Zerodha website and login to Console.
2. Go to Portfolio and click the IPOs link.
3. Go to the 'Ruchi Soya FPO' row and click the 'Bid' button.
4. Enter your UPI ID, Quantity, and Price.
5. ‘Submit’ IPO application form.
6. Visit the UPI App (net banking or BHIM) to approve the mandate.

Here are 5 simple steps to invest in an FPO via Upstox:

Step 1: Log in to the Upstox application or website with your credentials.
Step 2: Select the FPO that you want to invest in and create an FPO application.
Step 3: Add up to 3 bids within the price range.
Step 4: Confirm your application.
Step 5: Accept the UPI mandate and block funds on your mobile UPI app.

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