Is Onix Renewable Going Public Without IPO? Know The Plans

In a move to list indirectly, Onix Renewable has announced its merger with BSE-listed Eureka Industries under the NCLT-approved merger scheme. Let’s understand in-depth the proposed merger scheme, share swap ratios and potential impact on all stakeholders.

Key Merger Details 

This merger is between Onix Renewable Limited and Eureka Industries, where Onix Renewable will be merged with BSE-listed Eureka Industries and renamed as “Onix Renewable Limited."

Share Swap Ratios

1)Onix Shareholders to go under a 1:1 swap

If you are an investor in Onix renewable unlisted shares, you will get 1 share of Eureka Industries for every 1 share held in Onix renewables

Here are some cases:

For Onix renewable unlisted shareholders, there is no reduction in investors' equity.

2) Eureka Shareholders under equity restructure with 15:1 swap

For every 15 shares of Eureka held, the shareholder will get 1 share of Eureka (post-merger). The remaining 14 shares will be converted to 0.01% redeemable preference shares (redeemable after 10 years).

For example, Mr Bansal owns 1500 shares of Eureka pre-merger.

Effective date of the Onix-Eureka Merger

According to the scheme of arrangement, the proposed merger date is 1st April, 2026, which means all assets, liabilities, revenues, and profits of ONIX will be considered transferred from this date. 

The final implementation will happen only after NCLT approval and ROC filing, which will decide the effective date of the merger. 

Merger Impact on Onix Unlisted shareholders

Onix Shareholders have 12.96 crore shares outstanding, while Eureka has only 87.5 lakh shares. Due to this major difference, Onix's unlisted shareholders are expected to become the dominant shareholders of the merged listed company. 

Merger impact on Eureka shareholders

Investors in Eureka shares will go through a major equity restructuring, and their equity will be significantly reduced. 

Why Is Onix Renewable choosing the reverse listing route? (listing without IPO)

The transferee company, Eureka Industries, is going through heavy financial stress. As both Eureka and Onix are engaged in similar business (renewable energy generation and distribution), the merger could bring a revival of Eureka’s operations as a going concern.\

At the same time, Onix Renewables, which is not yet listed in the markets, will get access to the capital market without launching any traditional IPO. 

Here are some opportunities and benefits for Onix:

A) Onix will get faster market access without preparing for any IPO, DRHP filing, roadshows, etc. 

B) Onix can raise funds from the listed market  in other ways, like right issues, preferential allotments and QIPs

C) Onix will gain brand visibility and credibility due to its listing status. Better for investors, lenders, customers, and business partners.

However, this reverse listing process can also involve the following trade-offs:

• NCLT Approval Process

• SEBI and stock exchange scrutiny.

• Complex shareholding restructuring.  

• Dilution of Eureka-listed shareholders.

Potential implications of Onix Renewable's listing 

A)Transition from unlisted shares to listed equity shares 

If the scheme is approved, Onix shareholders will receive 1 share of Eureka Industries, thus moving from holding unlisted shares to shares of a listed company. 

B) Liquidity improvement

Today, Onix renewable shares are bought and sold in an unlisted market with limited liquidity. In the listed market, the entry and exit of shares will be much easier. 

C) Market-based valuation

Listed Onix shares will have better transparency of pricing and rerating opportunities and can also attract institutional or retail investors.

D) No change in share count

The proposed 1:1 swap ratio means Onix shareholders retain the same number of shares after the merger. 

E) Lock-in and regulatory considerations

There is a lot to get finalised, including the scheme approval, stock exchange approvals, and lock-in provisions that may apply after the merger becomes effective.

Investors must consider the financial performance, valuation, and plans before investing in Onix Renewable unlisted shares.