Here are a few differences between IPO and FPO

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What is an FPO?

FPO is a follow up to the IPO as the name suggests. A follow on public offer is the issuance of shares after the company is listed on a stock exchange. In other words, an FPO is an additional issue whereas an IPO is an initial or first issue.


Here are a few differences between IPO and FPO

1. Meaning The first issue of shares by a company Issuance of shares by a company to raise additional capital after IPO
2. Price Fixed or variable price range Price is market driven and dependent on number of shares increasing or decreasing
3. Share capital Increases because the company issues fresh capital to the public for listing. Number of shares increases in dilutive FPO and remains the same in non-dilutive FPO
4. Value Expensive Cheaper in most cases because the value of the company is getting further diluted.
5. Risk Riskier Comparatively less risky
6. Status of the company An unlisted company issues an IPO An already listed company issues an FPO

It depends on your risk level and goals. Your risk levels need to be extremely high to invest in an IPO because you do not have much idea about the company. An FPO is relatively a safer bet for individual investors and new investors. Investing in an IPO requires more research than FPO. You need to understand the company fundamentals. If you are a long term investor, with a good risk appetite and have faith in the company, you can consider investing in an IPO. When it comes to the differences between FPO and IPO, risk and returns are very important components. However, risk and returns are correlated. IPOs have more potential to return more money if the company kicks off to a good start but there are more ‘ifs’ to it. To understand your profile as an investor and then take the decision.

We are not SEBI/IRDA registered. The information provided herein is for education purposes only. We will not be responsible for any of your profit/loss with this channel's suggestions. Consult your financial advisor before making any decisions.
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