What is the difference between IPO and FPO

There are many people who are just getting a hang of the term IPO’s, but there are fewer people who are aware of the term FPO’s and what the differences are between them. In this blog, we are going to look at the differences between the two.
IPO
What is Initial Public Offer?

Initial Public Offer (IPO) is a process where a company offers its shares to the public for the very first time. This is a very important event for a company, as it marks its transition from private to public entity. This transition is generally accompanied by a significant surge in the company’s stock value. Once a company goes public, it’s subject to the rules, regulations, and reporting requirements of being a public company. The company’s stock also becomes available for trading on an established securities market.

What is Follow on Public Offer?

Follow on Public Offer is another type of public issue i.e. public issue by a listed company. The main objective of follow on public offer is to raise capital from investors in order to grow the business. The company will have already completed one public issue and the new public issue is made by the company to increase the number of shares in the hands of public. The existing shareholders have the option to sell the shares to new buyers. Follow on public offer is also known as secondary issue, follow up issue, second issue or over issue. The follow on public offer is made in order to capitalize the business for growth. The follow on public offer is divided into two parts. The first part is the allocation of shares to promoters/ existing shareholders. The second part is the allocation of shares to non promoters.

Difference between IPO and FPO

To be able to better understand the differences between IPO and FPO, one must first understand what an IPO or FPO is. An IPO (Initial Public Offering) is when a private company goes public and makes its shares available for purchase by the public for the first time. An FPO (Follow-on Public Offering) is when a public company decides to do a follow-up IPO.

An initial public offering (IPO) is when a private company has its stock publicly traded for the first time. The IPO is one of the most common ways for a company to go public and raise money by selling shares of their stock. A follow-on public offering (FPO) is a stock that has already been issued or sold in the public markets. A follow-on public offering can be carried out for a company that is already publicly traded; this is known as a primary offering or a secondary offering. Follow on public offer (FPO) is an issue of shares of a company by an existing shareholder to the general public. The offer is made at a price lower than the face value of the shares. It is also known as the discounted price issue. Follow on public offer is made against an existing public issue of shares.

Conclusion

We hope you enjoyed our article on IPOs and FPOs. As you can see, when it comes to IPOs and FPOs there are major differences. It’s important to know what each type of security is before you invest and take advice from best SEBI registered stock advisory company.

Comments are closed