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Key Difference Between IPOs and FPOs

admin 5 years ago 2 min read

Overview

When you want to invest in Financial Market you can invest there in Direct Stock market Or you can invest your funds through

IPO’s (Initial Public Offer)

FPOs (Follow-on Public Offer)

With both of the above instruments you can start investment in Stock Market. Let’s discuss the key difference between both IPOs and FPO.

What is IPO

Basically the IPO refers to the first sale of shares from Private Corporation to the public in a new stock issuance. Public share issuance allows a company to raise funds from public. When a company is listed in Stock Market after that company launch their IPO and raise funds.

But if you want to buy company shares than you can buy share after the listing date of stock. It can be high or low as per the market.

What is FPO

FPO refers as Follow-On Public Offer. The FPO starts after the IPO. A follow-on offering is an issuance of additional shares made by a company after an initial public offering (IPO) or we can say that it is secondary offerings.

Key Difference between IPO and FPO

Difference	IPO	FPO
Issuer	IPO share offering by Unlisted company (First time Offer).	While in FPO offering by already List company.
Raising Capital	Through IPO funds raise by first time from public.	In the other hand FPO it is subsequent public contribution.
Risk	IPO Risk is very high, because share can be listing on lower circuit.	It is Comparatively low risk.
Predictability	It is Less predictable because its first time of any company.	It an be More predictable because company already listed in Stock Exchange
Profit	IPO can give you profit Higher than FPO	Can give you Lower as IPO

Conclusion

So from both IPO and FPO you can start your investment in the company. In IPO you can be the first share holder of the listed company but it may be more risky but can give you high returns. In the other hand you can invest in already listed company that is less risky and more predictable.

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