Through FPO, the company issues its follow-on-public offer. This means the company which is already listed in the stock market, offers new shares to the investors. These are different from the stocks present in the market.
The dispute between Adani Group and American research firm Hindenburg has become a topic of discussion these days. But along with this, the FPO of Adani Enterprises is also in focus. This FPO is worth Rs 20,000 crore. In such a situation, it is important to understand what is FPO i.e. Follow-on Public Offer. How is it different from an IPO? Along with this, it should also be known why companies bring FPO… So let’s know the answers to all these questions…
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What is FPO?
Through FPO, the company issues its follow-on-public offer. This means the company which is already listed in the stock market, offers new shares to the investors. These are different from the stocks present in the market. Mostly these shares are issued by the promoters. FPO is used to diversify the equity base of the company.
Why do companies bring FPO?
To launch the shares in the market, the company first brings IPO. But, once listed, if new shares are to be issued, then FPO is used in that case. The company issues new shares with the aim of capital raising or paying off its debt. Through new shares, the company raises capital from the market and then uses it according to its needs.
IPO and FPO difference?
Companies use IPO or FPO for their expansion. Companies resort to IPO or FPO when funds are needed to grow the business. This fund is used to meet the needs of cash flow or to grow the business. For the first time, the company launches its shares in the market through an IPO. That’s why it is called Initial Public Offer. While additional shares are brought to the market in FPO.
