InvestTrade.in

Your Learning Hub for Smart Financial Growth

Choose you Language

What Is an FPO (Follow-on Public Offer)?

-

📘 What Is an FPO (Follow-on Public Offer)?

An FPO or Follow-on Public Offer is when a listed company issues new shares to the public after its Initial Public Offering (IPO). It’s a way for companies that are already listed on the stock exchange to raise additional funds by offering more shares.

🧾 Why Do Companies Go for FPO?

  • To raise more capital for expansion or debt repayment
  • To improve public shareholding
  • To meet regulatory requirements like SEBI’s minimum public shareholding norms

🔄 FPO vs IPO – What’s the Difference?

Aspect IPO FPO
Definition First time offer of shares to public Second or later offer of shares by listed company
Company Status Unlisted company Already listed company
Risk Factor Higher (no track record) Lower (company already known)

📂 Types of FPOs

  • Dilutive FPO: New shares are issued, increasing total share count and reducing existing ownership percentage.
  • Non-dilutive FPO: Promoters or major shareholders sell their own shares. Total share count remains the same.

📊 Should You Invest in an FPO?

FPOs are generally considered less risky than IPOs because the company already has a stock market track record. However, it’s still important to:

  • Check the purpose of fundraising
  • Read financials and management commentary
  • Compare FPO price to current market price

📌 Real Example of an FPO

One of the most well-known FPOs in India was by Coal India. The government used FPOs to divest its stake and raise capital while improving public shareholding.

💡 Quick Summary

  • FPO = Fresh or existing shares offered by a listed company
  • Used to raise more capital or dilute ownership
  • Less risky than IPO but still requires due diligence

📝 How to Apply for an FPO?

Applying for an FPO is very similar to applying for an IPO. Here's how you can do it:

  1. Log in to your stock broker's app or website (like Zerodha, Groww, Upstox, etc.)
  2. Go to the IPO/FPO section
  3. Select the FPO you want to invest in
  4. Enter the number of shares and price (or use cut-off)
  5. Approve the mandate via UPI or net banking

👤 Who Can Apply?

Anyone with a demat and trading account can apply for an FPO. You don't need to be a professional investor. Even beginners can participate.

✅ What to Check Before Applying

  • Read the company’s FPO document and reason for raising funds
  • Compare FPO price vs current market price
  • Check company’s past performance (available on NSE/BSE websites)

If you're just starting out, FPOs are a great way to observe how companies expand after listing. Always check the company’s intent and financial health before investing.

📚 Join my Telegram channel for educational stock market insights and research:
👉 https://t.me/Investtrade_by_Ankit

⚠️ This is for learning purposes only. Please do your own research before making any investment decisions.

Written by @nkit

Comments

Post a Comment

Popular posts from this blog

Fundamental vs Technical Analysis – Which One Should You Learn First?

-
Image
Fundamental vs Technical Analysis – Which One Should You Learn First? When entering the stock market, one of the first decisions you face is: should you learn Fundamental Analysis or Technical Analysis first? Both approaches are powerful, but they serve different purposes and suit different types of investors. 📘 What is Fundamental Analysis? Fundamental analysis involves evaluating a company’s financial health, business model, earnings, management, and industry position . The goal is to determine the intrinsic value of a stock and see if it’s undervalued or overvalued. Key factors considered: Revenue and Profit Growth Debt Levels Return on Equity (ROE) Industry Trends Management Quality Example: An investor studying Tata Motors ’ annual reports, product plans, and profitability over the last 5 years is doing fundamental analysis. 📈 What is Technical Analysis? Technical analysis, on the other hand, involves studying price charts, volume pat...
Read more

What Is the Stock Market? A Simple Guide for New Investors 📊

-
Image
  What Is the Stock Market? A Simple Guide for New Investors 📊 The stock market may sound confusing at first, but it's actually quite simple 😊. It's like a big online shop where you can buy and sell tiny pieces of companies. These pieces are called shares or stocks . Why Does the Stock Market Exist? 💼 Companies need money to grow, launch new products, or expand their business. So they go to the stock market and sell some shares. People who buy these shares become part-owners of the company and can earn profits if the company does well. Who Are the Main Players? 🧩 Retail Investors – People like you and me who invest small amounts. Institutional Investors – Big investors like banks, mutual funds, etc. Stock Exchanges – Platforms like NSE and BSE where buying and selling happens. Brokers – Companies like Zerodha, Groww, Upstox that help you invest. How Do You Make Money? 💸 There are mainly two ways to earn from the stock market: ...
Read more

What Is an IPO? Everything a Beginner Should Know About Initial Public Offerings

-
Image
📢 What Is an IPO? A Complete Beginner’s Guide An IPO or Initial Public Offering is when a private company offers its shares to the public for the first time, allowing everyday investors like us to become part-owners of that company. But there’s more to IPOs than just buying shares. Let’s explore everything in detail — in simple, beginner-friendly language. 🔍 What Does IPO Mean? IPO = Initial Public Offering. It’s the first time a private company offers its shares to the public by getting listed on a stock exchange (like NSE or BSE). After the IPO, anyone can buy or sell its shares. 💡 Why Do Companies Launch IPOs? ✅ To raise capital for growth or expansion ✅ To repay debt or strengthen financials ✅ To give exit opportunity to early investors ✅ To gain credibility and brand trust   📊 How Does an IPO Work?           1. The company hires investment banks to underwrite the IPO   ...
Read more