Patanjali Ayurved, the promoter of Patanjali Foods, made an unexpected announcement on July 13, stating that it would not exercise the 2 percent oversubscription option (commonly known as the greenshoe option) for its ongoing Offer for Sale (OFS). The company did not provide specific reasons for this change of decision.
Initially, Patanjali Ayurved had disclosed its plan to sell a 7 percent stake in the company through the OFS, with an additional 2 percent set aside in case of oversubscription.
In an official statement, Patanjali Ayurved conveyed its intention to the stock exchanges: “We wish to intimate the Stock Exchanges of our intention not to exercise the Oversubscription Option. Accordingly, the total Offer size will be the Base Offer Size. Consequently, 25,33,964 equity shares would be reserved for allocation to Retail Investors, subject to receipt of valid bids, as part of the Offer on July 14, 2023.” The floor price for the OFS was set at Rs 1,000 per share, representing a discount of approximately 19 percent compared to the previous closing price of Rs 1,228.05.
As of June 2023, the Promoter and Promoter Group collectively held an 80.8 percent stake in Patanjali Foods, while Patanjali Ayurved owned a 39.37 percent stake. Notably, in March, the stock exchanges had frozen 292.58 million shares of the promoter group entities of Patanjali Foods due to non-compliance with the minimum public shareholding requirement within the stipulated deadline.
Patanjali Foods, formerly known as Ruchi Soya Industries, underwent insolvency proceedings initiated by the National Company Law Tribunal in December 2017. Subsequently, in July 2019, Patanjali Ayurved’s recovery plan for Ruchi Soya was approved by the tribunal. Following the implementation of the resolution plan, the company’s public shareholding was reduced to 1.10 percent.
The decision to cancel the greenshoe option brings clarity to the OFS process, with the revised offer size now reflecting the base offer size. Investors and retail participants eagerly await the outcome of the offer, which will be determined on July 14, 2023.
