SEBI allowed non-anchor buyers to withdraw their bids for Ruchi Soya Industries Ltd’s share sale, citing misleading advertising, a rare occurrence for India’s market regulator.
The Securities and Exchange Board of India met with representatives of the book running lead managers to discuss unsolicited SMSs advertising Ruchi Soya’s follow-on public offer, according to a notice from the regulator. “…the contents of which appear to be misleading/fraudulent and not in accordance with the SEBI (ICRD) Regulations, 2018,” it stated.
Between March 28 and 30, the regulator permitted all investors except anchor buyers to withdraw from the issue. SEBI requested that the company notify all investors and stock exchanges of the withdrawal window. It also ordered the Patanjali Group-owned edible oil maker to run advertisements in the same newspapers as the FPO to warn investors about unsolicited SMSs.
On the final day, Monday, Ruchi Soya’s Rs 4,300 follow-on public offer was subscribed to 3.6 times. According to BSE data, the edible oil maker’s FPO was oversubscribed, with bids for 17.60 crore equity shares exceeding the 4.89 crore shares on offer. To prepay debt, the company is raising capital through new equity.
According to its exchange filing, non-institutional investors’ shares were subscribed 11.75 times, while retail investors’ shares were subscribed 0.9 times. Employees bid on the redistribution for qualified institutional buyers 2.20 times, while qualified institutional buyers make an offer for 7.76 times the shares on offer for them.
Ramdev was seen in a viral video asking his followers to buy shares of Ruchi Soya Industries if they wanted to become crorepatis.
“In the video, Shri Ramdev, one of the issuer’s directors, is seen addressing a crowd at one of his Yoga Shivirs or Yoga Meets.” In his address, he is seen marketing the FPO of Ruchi Soya Industries and referring to the investment as a “Mantra for Becoming a Crorepati.”
It should be noted that the referred address falls under the category of ‘Public Communication,’ as defined in Schedule IX of the SEBI (ICDR) Regulations, 2018. Prima facie, the attached address provided by one of the issuer company’s directors appears to be in violation of the following Schedule IX clauses,” SEBI said in the letter to Ruchi Soya, where Ramdev is a non-executive director.
The clause asserted that a communication by a company intending to enter the public markets should only contain the information contained in the draught offer document. It also stated that “no public information pertaining to the issue shall contain any offer of incentives, whether direct or indirect, to the investors in any manner, whether in cash, kind, or services or otherwise.” Ramdev and the company might have gotten away with a warning at the time.
