Shares of Baba Ramdev-led Patanjali Foods hit a 5% lower circuit limit of ₹1,166.65 in opening trade on Thursday after the promoter announced to sell up to 9% stake in the FMCG company through an offer for sale (OFS). The floor price for the share sale has been fixed at ₹1,000, at a sharp discount of 18.6% to the previous closing level. On Wednesday, Patanjali Foods shares settled at ₹1,228.05, up 1.32% on the BSE.
In an exchange filing on Wednesday, Patanjali Foods said its promoter, Patanjali Ayurved, is looking to offload up to 25,339,640 equity shares of face value of ₹2 each, representing 7% of the total paid-up equity share capital of the company. In case of oversubscription, there is a provision to additionally sell up to 7,239,897 shares, representing 2% of the total paid-up equity share capital. In such a case, the total OFS would be of up to 32,579,537 shares, or 9% of the company’s equity shares.
If the promoter sells its 9% stake in the company at the floor price of ₹1,000 apiece, it would fetch around ₹3,258 crore to Baba Ramdev-led Patanjali Ayurved.
The promoter is selling stake in the company to meet the minimum public shareholding norms. As of June 30, 2023, Patanjali Ayurved held 14,25,00,000 shares, or 39.37% stake, in Patanjali Foods. Overall, the promoter group owned 29,25,76,299 shares, or 80.82% stake, in the company through five entities, which is higher than the maximum permissible public shareholding limit of 75%. The company has to increase its public shareholding from 19.18% to 25% as mandated by the Securities and Exchange Board of India (SEBI) for a listed business.
The OFS will open on July 13 for only non-retail investors, while retail investors and those non-retail investors can bid for the shares on July 14. “Only non-retail investors shall be allowed to place their bids on T day, i.e. July 13, 2023. While placing their bids, the non-retail investors may indicate their willingness to carry forward their un-allotted bids to T+1 day for allocation to them in the unsubscribed portion of retail category,” the release said.
“Only retail investors shall be allowed to place their bids and revise their bids on T+1 day,” it added.
About 25% of the offer is reserved for mutual funds and insurance companies. In case of under subscription in this category, the unsubscribed portion will be available to other bidders in the non-retail category. Jefferies India and IIFL Securities will act as the brokers for the OFS.
Patanjali completed the acquisition of Ruchi Soya in a ₹4,350-crore deal in December 2019. In March last year, Ruchi Soya raised ₹4,300 crore from its follow-on public offering (FPO) to pay debt and achieve the minimum public shareholding of 25%. In April last year, the edible oil maker was renamed Patanjali Foods to enhance synergies with Patanjali Ayurved’s food portfolio.
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