Initial Public Offering vs Follow-on Public Offering || IPO vs FPO

 An initial public offering (IPO) and follow-on public offering (FPO) are two of the most important events in the life cycle of a company. They offer an opportunity for companies to raise capital and expand their operations, while also providing an opportunity for investors to purchase shares of a company and benefit from its growth. In this article, we will discuss all about FPO and IPO and the differences between them.

What is an Initial Public Offering (IPO)?

An Initial Public Offering (IPO) is the process by which a privately held company goes public and offers shares of stock to the public for the first time. It’s a way for companies to raise capital by issuing new shares of stock and selling them to the public. The money raised from an IPO is used to fund business expansion, repay debt, and pay for other business operations.

IPOs are often accompanied by a lot of excitement and hype, as investors are eager to get in on the ground floor of a company that is poised for growth. However, there are also risks involved in investing in IPOs, as the stock price can be volatile in the early stages of a company’s life as a public entity.

What is a Follow-on Public Offering (FPO)?

A Follow-on Public Offering (FPO) is a subsequent offering of shares by a company that has already gone public through an IPO. This is often done when a company wants to raise additional capital, or when its existing shareholders want to cash in on the company’s growth. FPOs are similar to IPOs, in that they involve the sale of new shares of stock, but they differ in that the company has already gone public and has a track record of performance.

The main difference between an FPO and an IPO is that an FPO involves the sale of additional shares by a company that has already gone public, while an IPO involves the sale of shares by a company that is going public for the first time.

In conclusion, IPOs and FPOs are important tools for companies to raise capital and expand their operations. IPOs represent the first time that a company goes public and offers its stock to the public, while FPOs are subsequent offerings of shares by a company that has already gone public. Both IPOs and FPOs offer investors the opportunity to benefit from a company’s growth by purchasing shares of its stock.

However, it is important for investors to understand the differences between IPOs and FPOs, including the purpose of the offering, the timing of the offering, and the type of shares being offered. Additionally, investors should consider their own risk tolerance and investment goals, and seek advice from a financial advisor or professional before making a decision. With the right approach, investing in IPOs and FPOs can be a lucrative way to build wealth and achieve financial independence.