Read here to know the definition and other important things related to FPO and how it differs from IPO.
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FPO or Follow on Public Offer is a process by which an already listed company issues new shares to investors or current owners, usually the promoters. Companies use FPO to diversify their equity base.
FPO is used by a company after it completes an initial public offering or initial public offering and wants to make more of its stock available to the public or raise funds to expand or pay off debt.
FPO: MEANING
A follow-up public offering, or FPO, is a process by which a public company issues new shares to existing shareholders or to the market for new investors.
A company can issue new shares to investors or current shareholders, generally the promoters, through an FPO. A company can use an FPO to diversify its stock base or to pay off debt.
DIFFERENCE BETWEEN FPO AND IPO:
An IPO (Initial Public Offering) is a process in which a private company goes public for the first time by issuing shares to the general public. Going public is usually riskier because investors need to do extensive research on the company and its history before investing.
An FPO, on the other hand, is issued by a company that is already listed. Investors can simply look at the company’s market trends and decide whether to invest or not.
FPOs are used by public companies to cover their debt, increase their capital, or reduce their stake in the company. IPOs are used by private companies to increase their funds, while FPOs are used by public companies to pay down their debt, increase their capital, or reduce their stake in the company.
TYPES OF FPO:
A dilutive FPO and a non-dilutive FPO are the two basic forms of subsequent public offerings. In the first, the company’s board of directors agrees to issue additional public stock offerings.
This technique is used to raise additional funds or pay off debts.
The company’s shareholders sell their private shares to the public in a non-dilutive FPO. Privately held shares are sold by directors or significant shareholders.
Instead of going to the company, the money goes to the person selling the shares.
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