FPO

An FPO, or Follow-On Public Offering, is when a publicly listed company issues new shares. These shares are offered to the public for subscription, aiming to raise additional capital. Companies often use FPOs to expand their operations, fund research and development, pay off debt, or make acquisitions.

Example

Scenario:
ABC Ltd., a publicly listed company, wants to raise ₹200 crore to expand its manufacturing unit.

• Method: FPO (Fresh Issue)

• Offer Price: ₹500 per share

• Shares Issued: 4,00,00,000 shares (₹500 × 4 crore = ₹200 crore)

Outcome:

• Company raises ₹200 crore

• Funds are used for expansion

• Market capitalization may increase due to enhanced equity and investor participation

Non-Dilutive Example:
Promoters of XYZ Ltd. sell 1 crore shares in an FPO to the public. No new shares are issued; ownership of promoters decreases, but the company does not receive new funds