How is a follow on offering different from an initial public offering (IPO)?

How is a follow on offering different from an initial public offering (IPO)?

Understanding the differences between a Follow-on Public Offering (FPO) and an Initial Public Offering (IPO) is crucial for investors. Here’s a clear breakdown:

1.     Definition:

o   IPO (Initial Public Offering): This is when an unlisted company offers its shares to the public for the first time and gets listed on the stock exchange.

o   FPO (Follow-on Public Offering): This occurs when a company that is already listed on the stock exchange issues additional shares to the public.

2.     Type of Shares Offered:

o   IPO: Only new shares are offered.

o   FPO: Either new shares are issued, increasing the total number of shares, or existing shares held by promoters are offered for sale again.

3.     Pricing:

o   IPO: The company sets the price within a specified price band.

o   FPO: Shares are typically offered at a discount to the current market price to attract investors.


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