What happens in an FPO?
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 makes the shares more attractive to
potential investors.
2.
Attracting Subscribers: By offering shares at a lower price, the company aims to attract
more investors and ensure that the FPO is successful.
3.
Market Impact: When the FPO is announced, the increased supply of shares at a
lower price can lead to a drop in the market price of the company’s existing
shares. Over time, the market price may adjust and align more closely with the
FPO issue price.