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All you want to know about FPO (Follow on Public Offering)

All you want to know about FPO (Follow on Public Offering)


Category : Knowledge Center

Follow on Public Offer (FPO)

An FPO is when a company that is already on the stock exchange wants to raise more money by selling more of its shares to the public. It is like the company saying, "We're already on the stock exchange, but we need more money, so we're giving people the opportunity to buy more shares in our company."

Types of Follow-On Public Offers (FPOs)

A dilutive FPO means that a company is creating more shares to sell to the public, which can reduce the ownership percentage and earnings for existing shareholders.

A non-dilutive FPO means that the company is not creating new shares, but instead, existing shareholders are selling their own shares to the public. This does not change the value or ownership for current shareholders.

What Are the Benefits of Follow-On Public Offers (FPOs)?

An FPO (Follow-on Public Offering) is a way for companies to raise more money from the public by selling additional shares of their stock. Here is what it means for companies:

Getting more money: Companies launch an FPO to raise extra funds. They can use this money to pay off debts or invest in growing their business.

Making shares easier to buy and sell: An FPO increases the number of shares available for investors to buy and sell. This means there is more liquidity, making it easier for people to trade the company's stock.

Bringing in new investors: Through an FPO, a company can attract new investors who buy their shares. This helps the company diversify its investor base and increases the ownership of different individuals in the company.

Building a better reputation: A successful FPO can enhance a company's reputation in the market. It shows that investors believe in the company's potential for growth and financial stability, which can improve how the company is perceived by others.


Initial Public Offering (IPO):

  • Private companies want to raise money to grow their business.
  • They decide to offer shares (pieces of ownership) of their company to the general public for the first time.
  • By doing this, the owners and promoters of the company give up some of their ownership to investors who buy these shares.
  • The company becomes a publicly listed company and its shares can be bought and sold on stock exchanges.
  • The company uses the funds raised from the public to finance its activities and expand its operations.

Follow-on Public Offering (FPO):

  • Companies that are already listed on the stock exchanges may want to raise more money or reduce their debt.
  • They decide to offer additional shares to the general public.
  • By doing this, the company increases the number of shares available in the stock market.
  • This may dilute the ownership of the existing shareholders, including the owners and promoters.
  • The company uses the funds raised from the FPO to either strengthen its financial position or finance new projects.

In simple terms, an IPO is when a private company goes public for the first time by selling shares to the public, while an FPO is when an already listed company offers more shares to the public to raise additional funds or reduce debt.

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