IPO vs. FPO: Understanding Initial and Follow-on Public Offerings
CA Dishant Kothari
Managing Partner at VKND & Co. | Expert in Fund Setup, IPO Advisory, and Corporate Structuring in IFSC | Educating on Financial Strategies and Opportunities in Gift City"
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An IPO is a company's first entry into the stock market. It involves issuing new shares to the public for the first time. This allows the company to raise a significant amount of capital to fund growth, expansion, debt repayment, or other strategic initiatives.
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?????????????????????????????????? ????????????? ??????????????????????????????????????: IPOs provide a large pool of capital from a broad range of investors.
??????????????????? ???????????????????? ?????? ??????????????????????: Going public enhances brand recognition and attracts investor confidence.
??????????????????? ?????? ????????????????????????: Shareholders (founders, early investors) can sell their shares to the public, providing an exit strategy and potential profit.
????????????????? ?????????????????? ??????????????????????: Public companies have easier access to additional capital through future offerings.
IPO Listing in India:
IPOs in India are primarily listed on two stock exchanges:
? ???????????? ?????????? ???????????????? (??????): The oldest stock exchange in Asia, known for its benchmark Sensex index.
? ???????????????? ?????????? ???????????????? ???? ?????????? (??????): The largest stock exchange in India, known for its benchmark Nifty 50 index
???????? ?????????? ???? ???????????? ???????????????????? ???????????? (??????), India's first listing platform by India International Exchange (India INX) situated at GIFT City, to raise funds in any currency of choice by both foreign and Indian issuers from investors across the globe.
The GSM platform focuses on the core principles of transparency, technology, integrity and robust regulation.
The specific exchange depends on the company's size, industry, and listing requirements.
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An FPO is a subsequent offering of shares by an already publicly traded company. It allows the company to raise additional capital after its initial IPO.
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???????????? ?????? ??????????????: FPOs are typically quicker and less expensive than IPOs due to existing infrastructure.
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?????????? ???????? ?????? ??????????????????: Existing track record of the company allows for better due diligence by investors.
?????????????????? ?????? ?????????????? ??????????????: FPOs may be priced at a premium to the current market price, reflecting investor confidence.
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The decision to raise funds through IPO or FPO depends on the company's specific needs and circumstances. Here's a breakdown for further analysis:
?????????????? ??????????: IPOs are ideal for companies in a high-growth phase needing significant capital. FPOs suit established companies seeking additional funds for expansion or specific projects.
??????? ??????????????: The initial price of IPO shares is determined through a book-building process, where investor demand is assessed.
??????? ????????-???? ????????????: Promoters and anchor investors may have a lock-in period where they cannot sell their shares after the IPO. This helps maintain stability in the share price.
????????????? ????????????????????: Favorable market conditions are crucial for a successful IPO. FPOs may be less susceptible to market fluctuations.
????????????????? ????????????????: A strong IPO hinges on generating investor interest in the company's future potential. FPOs rely on the company's existing track record.
Additional Considerations:
????????? ????. ????????????: Companies should weigh the advantages of debt financing against equity dilution through IPOs or FPOs.
????????????????????? ??????????????????????: Regulatory requirements for IPOs and FPOs can vary depending on the jurisdiction.
Further Research:
For a more detailed analysis of IPOs in India, you can explore these resources:
? Securities and Exchange Board of India (SEBI): https://www.sebi.gov.in/
? Bombay Stock Exchange (BSE): https://www.bseindia.com/
? National Stock Exchange of India (NSE): https://www.nseindia.com/
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3 个月Very informative