Should you subscribe to an FPO?

Should you subscribe to an FPO?

Deciding whether to invest in a Follow-on Public Offering (FPO) can be a smart move, especially compared to investing in an Initial Public Offering (IPO). Here’s why:

1.     Familiarity with the Company: Unlike an IPO, where the company is new to the market, an FPO involves an already listed company. This means you have access to the company’s past performance, management history, and business practices. You can review its earnings reports and stock market performance, which provides valuable insights.

2.     Lower Risk: FPOs generally carry less risk compared to IPOs. Since the company is already established, there is less uncertainty about its operations and financial health. Often, the shares in an FPO are priced lower than the current market price to attract investors, reducing the risk for new buyers.

3.     Opportunity for Arbitrage: Investors sometimes take advantage of the discounted price in an FPO by buying shares at a lower price and then selling them at the current market price for a profit. This is known as arbitrage.

4.     Easier Research: While you should still research the company’s performance and history, evaluating an FPO is usually simpler than analysing an IPO. For investors who prefer a less complex analysis, an FPO can be a more accessible way to invest.

5.     Price Advantage: One of the main reasons for choosing an FPO over buying listed shares is the price advantage. FPO shares are often offered at a discount to the market price, making them a potentially cheaper investment.


    • Related Articles

    • What happens in an FPO?

      In a Follow-on Public Offering (FPO), a company issues additional shares to the public. Here’s what typically happens during an FPO: 1. Issue Price: The company often sets the issue price for the new shares lower than the current market price. This ...

    • Why does a company need an FPO?

      A company usually conducts a Follow-on Public Offering (FPO) to raise additional capital. This is typically done through a dilutive FPO, where new shares are issued to generate new funds. Here’s why a company might need an FPO: Raise Additional ...

    • What is an FPO (Follow-on Public Offering)?

      A Follow-on Public Offering (FPO) is a method by which companies that are already listed on the stock exchange issue additional shares to the public. This is different from an Initial Public Offering (IPO), where a company offers its shares to the ...

    • How to Subscribe to Advanced Strategies?

      Following is the step-by-step guide for subscribing to the Advance Strategies- Login to the 5paisa App Go to the ‘Idea’ Section Go to Advanced Strategies Click on Deploy Select Capital/Multiplier Click on 'Deploy Strategy' Click 'Yes' and Accept the ...

    • Can I unsubscribe from the Advanced Strategies?

      Yes, you can unsubscribe from the Advanced Strategy subscription from the ‘Live Strategy’ section. Following scenarios will occur when you unsubscribe from the advanced strategies- If trades are not placed– The strategies will stop immediately and ...