Follow on Public Offer (FPO)

A Follow-on Public Offer (FPO) is the issuance of additional shares by a company that is already listed on a stock exchange. It allows the company to raise further capital from public investors after completing its initial public offering (IPO).

Companies typically launch an FPO to raise capital for expansion, reduce existing debt, fund acquisitions, strengthen their balance sheet, or meet regulatory capital requirements.

An IPO is the first time a private company offers shares to the public and becomes listed on a stock exchange. An FPO, on the other hand, is issued by a company that is already publicly listed and seeks to raise additional capital from the market.

There are generally two types of FPOs:

• Dilutive FPO, where the company issues new shares to raise capital.
• Non-dilutive FPO, where existing shareholders, such as promoters or investors, sell their shares to the public.

The price of an FPO is determined based on market conditions, company valuation, investor demand, and regulatory guidelines. Pricing may occur through a book-building process or a fixed-price mechanism.

A merchant banker acts as the lead advisor and manager to the issue. Responsibilities include structuring the offering, preparing regulatory documentation, coordinating with regulators and exchanges, marketing the issue to investors, and overseeing the entire transaction process.

The timeline for an FPO varies depending on regulatory approvals, documentation preparation, and market conditions. Typically, the process may take several weeks to a few months from planning to completion.