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.  
 

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

Post a Comment

Popular posts from this blog

Investment Strategies to Diversify your Portfolio

Image
  Investing in stocks can be a great way to grow your wealth over time, but it can be risky if you do not diversify your portfolio. Investing is a great way to have your money working for you. It is a way to build your retirement fund, pay for your children's education, and increase your wealth without being involved with day to day operations. However, investing is not risk-free and can be quite complicated. One of the most important steps in investing is understanding risk and diversification.   What is diversification and why is it important?   Diversification is simply the practice of investing in more than one asset class. By doing this, you protect your portfolio from risk. Diversification can include investing in more than one type of asset, like stocks, bonds, and cash. But it can also involve investing in other types of assets, like real estate or commodities.   Diversification is a risk management strategy that involves spreading your investment acros
Read more

The Complete Guide to Understanding Commodity Trading

Image
Commodity trading buying and selling is one of the oldest forms of trading. Trading can be defined in different ways. But when it comes to commodities trading, there are few things that cannot be ignored. Commodity trading is a complex market where a slight change in the market can have a major effect on returns. Not only is this a complex market, but commodity trading is also a vast market where there is a lot of variety in terms of products and traders. However, if you want to be a trader of any kind, understanding commodity trading is of utmost importance. This guide will help you understand everything about commodity trading.     What is the Commodity Market?   The commodity market is a market that trades in primary products. The term commodity comes from the Latin "commodum", meaning "useful things". Commodities are most often raw materials (such as food or metals), agricultural products, or fuels.   The commodity market is a large and extr
Read more

A complete guide to Reverse Stock Split

Image
 A reverse stock split is an unusual but useful tool for companies to use. A reverse stock split is when the company reduces the number of outstanding shares in order to increase the value of the stock. Reverse stock splits are also used to raise money by issuing new stock to existing stockholders at a discounted rate. A reverse stock split can also be used to lower the number of shares a company has to issue as it grows.   What is reverse stock split?   Reverse stock split is a mechanism for decreasing the number of outstanding shares of stock in a company. In practice, it is more like a stock dividend in reverse, where a larger number of shares are combined into a smaller number of shares. For example, a 1:3 reverse stock split means that if you started with 1,000 shares and had a 1:3 reverse stock split, the day after the reverse stock split you would have 3,000 shares. When a company is doing poorly, it may choose to do a reverse stock split to boost its stock pr
Read more