Follow on Public Offer (FPO) - Complete Guide
By Admin | 30 Dec 2025 | 6 views
An FPO (Follow-on Public Offer) is a method by
which a company that is already listed on the stock exchange issues
additional shares to the public to raise more capital.
Below is a complete and detailed explanation:
1. Meaning of FPO
A Follow-on Public Offer (FPO) is a public issue
of shares made by a company after it has already completed an IPO and is
listed on the stock exchange.
- Conducted
in the primary market
- Used to
raise additional funds
- Available
only for listed companies
2. Purpose of an FPO
Companies launch FPOs to:
- Raise
capital for expansion or new projects
- Reduce
debt
- Improve
capital structure
- Meet
regulatory requirements
3. Types of FPO
(a) Fresh Issue
- Company
issues new shares
- Money
goes to the company
- Share
capital increases
(b) Offer for Sale (OFS)
- Existing
shareholders sell shares
- Company
does not receive funds
- No
increase in share capital
👉 An FPO may
include both fresh issue and OFS.
4. Pricing of FPO
1. Fixed Price Issue
- Shares
offered at a fixed price
2. Book-Building Issue
- Price
band is provided
- Investors
bid within the band
- Final issue
price determined by demand
5. FPO Process (Step-by-Step)
- Company
appoints merchant bankers
- Files
offer document with SEBI
- Announces
price band and dates
- FPO
opens for subscription
- Investors
apply via ASBA
- FPO
closes
- Shares
allotted
- Shares
credited to investors
6. Who Can Invest in an FPO
- Retail
Individual Investors (RII)
- Non-Institutional
Investors (NII / HNI)
- Qualified
Institutional Buyers (QIB)
Rules are similar to IPO investments.
7. FPO vs IPO
|
Aspect |
IPO |
FPO |
|
Company status |
Unlisted |
Listed |
|
Purpose |
Initial capital |
Additional capital |
|
Risk |
Higher |
Lower |
|
Track record |
Not available |
Available |
8. Advantages of FPO
For Company
- Easier
fundraising (already listed)
- Better
market valuation
- Increased
public shareholding
For Investors
- Known
company performance
- Lower
risk than IPO
- Transparent
pricing
9. Disadvantages / Risks of
FPO
- Share
dilution
- Possible
price pressure
- Lower
excitement compared to IPO
10. Example of FPO
If a listed company issues 50 lakh new shares at
₹200 each:
- Funds
raised = ₹100 crore
- Money
goes to company
- Share
capital increases
11. Regulatory Authority
(India)
- Regulated
by SEBI
- Conducted
on NSE / BSE
12. In Simple Words
An FPO is when an already listed company issues more
shares to the public to raise additional funds.
