What is Follow on Public Offer (FPO)?

When does a company issue FPO?

A company generally issues FPO when it wants to raise more money by issuing new shares to pay its debts, finance new projects or for its corporate expenses among other things. The issue price for an FPO is generally lower than the current market share price of the company.

 

By FPO, a company also increases their equity base, giving investors more opportunities to invest in the firm. Through an FPO, existing shareholders can increase their stake in the company as well as new investors can buy shares at a lower price.

 

Types of FPOs

There are two