FPO Full Form

When you’re starting a business, there are a lot of things to think about. You need to come up with a good idea, make a plan, get the funding you need, and more. One thing that’s important but often overlooked is marketing. You need to find ways to get the word out about your business and attract customers. One great way to do this is through Follow On Public Offer (FPO). FPO can benefit your business in many ways, and we’ll discuss some of those here.

What is a FPO?

A Follow On Public Offer (FPO) is a type of public offering where the issuer of the securities already has outstanding shares registered with the Securities and Exchange Commission. An FPO allows these shareholders to sell some or all of their holdings, in addition to any new investors who may purchase shares through the offer.

An FPO can have several benefits for a company, including providing liquidity to shareholders and raising additional capital. It can also help to increase the market visibility and trading volume of a company’s shares. 

Benefits of FPO

– It can help a business raise additional capital.

– Following public offers can also help to improve the liquidity of a company’s shares.

– FPO can also help to send a positive signal to the market about the company’s future prospects.

– Following public offers can also help to broaden the shareholder base of a company.

– FPO can also help to improve the governance of a company.

Thus, we can see that Follow-on public offer can be very beneficial to any business.

Types of FPO

– Rights Issue: It is the most common type of FPO. In this, the existing shareholders of the company are given an opportunity to buy more shares in proportion to their holdings.

– Preferential Allotment: It is a type of FPO wherein the company allots shares to certain investors at a preferential price.

– Bonus Issue: In this type of FPO, the company distributes shares to its shareholders in proportion to their existing holdings.

– Public Issue: In a public issue, the company offers its shares to the general public for subscription.

– Global Depository Receipts (GDRs): GDRs are certificates that represent underlying shares of a foreign company. They are usually issued by banks and deposited in a depository.

– American Depository Receipts (ADRs): ADRs are certificates that represent underlying shares of a foreign company. They are usually issued by American banks and deposited in an American depository.

FPO Process

– Appointment of Merchant Banker: The company appoints a merchant banker to manage the FPO process.

– Drafting of Prospectus: The merchant banker drafts a prospectus, which is a document that provides information about the company and the FPO.

– Obtaining SEBI Approval: The prospectus is filed with the Securities and Exchange Board of India (SEBI) for approval.

– Filing of Draft Red Herring Prospectus: The draft red herring prospectus is filed with the Registrar of Companies (ROC).

– Road Shows: The merchant banker organizes roadshows to promote the FPO.

– Pricing of Shares: The shares are priced in accordance with the prevailing market conditions.

– Allotment of Shares: The shares are allotted to investors based on their applications.

– Listing of Shares: The shares are listed on the stock exchanges after getting the necessary approvals.

Difference Between IPO and FPO

When a company wants to raise money from the public, it can do so through an initial public offering (IPO) or a follow-on public offering (FPO). Both involve selling shares of the company to investors, but there are some key differences.

An IPO is when a company first offers shares to the public. It can be a risky process, as the company is essentially asking complete strangers to invest in its future. Follow-on public offerings, on the other hand, are when a company that has already gone public sells additional shares to the public. This is less risky, as the company has already proven itself to some extent.

Another key difference between IPOs and FPOs is that IPOs are typically much bigger. A company will raise more money through an IPO than an FPO, and the shares themselves will be more expensive.

This is because there is more risk involved with an IPO. Follow-on public offerings are typically smaller and the shares are cheaper.

Conclusion 

FPO is the practice of selling products that are not yet available for purchase. This can be an effective way to drive traffic and increase interest in your upcoming product releases. It can also help you to gauge customer demand and get feedback on potential products before they’re even released.