Introduction

Initial Public Offering (IPO)

• Purpose: Fund expansion, pay off debt, or improve the company’s profile.
• Process: Companies work with investment banks to determine the offer price and issue shares.
• Investor Impact: Offers an opportunity to invest early in a growing company.

Follow-On Public Offering (FPO)

• Purpose: Raise more capital post-IPO.
• Types:
  • Dilutive: Increases the total number of shares.
  • Non-dilutive: Shares are sold from existing shareholders.
• Investor Impact: Share prices may fluctuate depending on the demand and supply of new shares.

Offer for Sale (OFS)

• Purpose: Enable promoters or large investors to reduce their stakes.
• Features:
  • Quick and simple compared to IPOs or FPOs.
  • Shares are sold at market-determined prices.
• Investor Impact: Typically offered at a discount to encourage participation.

Rights Issue

• Purpose: Raise funds while giving preference to current shareholders.
• Features:
  • Issued in a specific ratio (e.g., 1:5, meaning 1 additional share for every 5 held).
  • Non-compulsory for shareholders to participate.
• Investor Impact: A cost-effective way to increase investment in the company.

Key Differences