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IPO vs FPO: Meaning & Difference

What Is the Difference Between IPO and FPO?

Refer to the table mentioned below to learn the difference between IPO and FPO.

Parameters

IPO

FPO

Meaning

IPO or Initial Public Offer refers to a process when a company ‘goes public’, offers its shares to them for the first time and is all set to get a listing on the stock exchange, i.e., NSE or BSE (or both)

FPO or Follow-on Public Offer refers to a process where a publicly listed company issues shares (at a large) publicly to investors

Objective

To raise capital through public investment

To inflow subsequent public investment

Issuer

Unlisted company

Listed company

Price

Fixed or variable price range

The price depends on the number of shares as they increase or decrease and is market-led

Share Capital

Increases as that company issue fresh capital to the public for listing

In the case of Dilutive Offering number of shares increases. On the other hand, the number of shares remains intact in Non-dilutive Offering

Value

Expensive

Cheaper in the majority of cases as the value of a company gets diluted further

Predictability

Less predictable

More predictable

Profitability

Highly profitable than FPO

Less profitable than IPO

The table clearly answers the question of what is the difference between IPO and FPO.

Thus, with a clear idea of the debate of IPO vs FPO, investors choose the right investment option after evaluating their risk-taking ability and goals and can make an informed decision.

Frequently asked questions