FPO

Investments

Quick Definition

An FPO (Follow-on Public Offer) is the process by which a company that is already listed on a stock exchange issues additional shares to the public to raise more capital.

Detailed Explanation

After a company is already listed (via IPO), it may issue more shares through an FPO to raise funds for expansion, debt repayment, or other business needs.

FPO shares are traded on exchanges like the National Stock Exchange and Bombay Stock Exchange and regulated by the Securities and Exchange Board of India.

Types of FPO

  • Dilutive FPO: New shares are issued → increases total shares → may dilute ownership
  • Non-Dilutive FPO: Existing shareholders sell their shares → no change in total shares

FPO vs IPO

  • IPO: First-time public issue
  • FPO: Additional shares after listing

Why Companies Use FPO

  • Raise additional capital
  • Reduce debt
  • Fund expansion or new projects

Advantages

  • Opportunity to invest in established companies
  • Usually lower risk than IPO

Risks

  • Share dilution (in dilutive FPO)
  • Possible price drop due to increased supply

Example

"A listed company issues additional shares at ₹200 through an FPO to raise funds for expansion."

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