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Because of the “circulation of unsolicited SMSes advertising the issue,” the Securities and Exchange Board of India (Sebi) has ordered Ruchi Soya Industries to allow investors who participated in its Rs 4,300 crore follow-on public offering (FPO) to withdraw their bids.

“Misleading/fraudulent” and “not in accordance with ICDR (Issue of Capital and Disclosure Requirements) regulations” were the words of the market regulator’s letter to the three investment bankers handling the share sale.

In the SMS, Patanjali Group was pitched as a good investment opportunity, according to sources. Business Standard was unable to verify the contents of the SMSes that were allegedly circulated during the FPO, which ended on Monday with 3.6 times subscription.

Sebi’s directive could delay the listing process and increase the risk of a share sale going unsubscribed if a large number of investors withdraw their bids, according to industry experts.

Investors and bidders (except anchor book participants) have the option of withdrawing their bids. On March 28, March 29, and March 30, 2022, the withdrawal period will be open. According to Sebi, investors will be informed of the withdrawal process and an advertisement will be placed explaining it.

Qualified institutional buyers (QIBs) signed up for the FPO 2.2 times, high-net-worth individuals (HNIs) 11.75 times, and employees 7.8 times. The FPO was subscribed to 2.2 times. 90% of the retail portion was only subscribed to.

Ruchi Soya FPO Final Day | Issue subscribed 3.6 times, QIB portion booked  2.2 times

In an unprecedented move by the regulator, the FPO’s future was thrown into doubt by the regulator’s decision to meet the minimum free-float requirement.

On Monday, Ruchi Soya’s hares dropped 6%, closing at Rs 815. Between Rs 615 and Rs 650 per share, the company’s initial public offering (FPO) was priced 20 to 25 percent lower than its previous close.

While the public holds only 1.1% of Ruchi Soya, Patanjali Ayurved, the company led by Baba Ramdev, holds 98%. Following the FPO, Patanjali’s shareholding is expected to fall to 81 percent, while the public shareholding will rise to 19 percent.. Price discovery would have been aided by the change.

This isn’t the first time the business has had to deal with the law enforcement community. In October 2021, Sebi issued a warning to the yoga guru and his company for making false investment promises.

In a now-viral video, Ramdev encourages his fans to invest in Ruchi Soya Industries in order to become crorepatis. A yoga shivir, or meet, is shown in the video, with one of the issuer’s directors, Shri Ramdev, addressing the crowd. His speech shows him touting Ruchi Soya Industries’ FPO and calling it a “mantra for becoming a crorepati.” For the avoidance of doubt, this refers to “public communication,” as defined in the Sebi (ICDR) Regulations, 2018 at Schedule IX. According to Sebi’s letter, “the attached address by one of the issuer company’s directors appears at first glance to be non-compliant with the following clauses of Schedule IX.”

Ruchi Soya FPO: Should you withdraw bid or stay invested? SEBI allows to  opt-out; here's how to do it | The Financial Express

Company communications intended for public markets must only include information from their draught offer document, according to this clause. No public information regarding 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,” it states. “

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