FPO stands for “Follow-on Public Offer.” It is a type of public offering in which a company that has already gone public and has shares trading on a stock exchange, issues additional shares to the public. The purpose of an FPO is usually to raise additional capital for the company, which can be used for things like expansion, new product development, or paying down debt.
In an FPO, existing shareholders are given the opportunity to purchase additional shares of the company before they are offered to the public. This is known as a “right issue” or “preemptive rights.” This allows existing shareholders to maintain their proportionate ownership of the company, even as new shares are issued.
The company issuing the FPO will typically retain a financial advisor or investment bank to help with the process. This includes things like determining the offering price for the shares, marketing the offering, and handling the legal and regulatory requirements.
FPOs are different from IPOs (Initial Public Offerings) where a company goes public for the first time by issuing shares to the public. It is also different from a Secondary Public Offer (SPO) where the existing shareholders sell their shares to the public to raise money.
Overall, FPOs are an important tool for companies looking to raise additional capital while maintaining a balance of ownership among existing shareholders. It is a way for companies to access public markets to raise capital for growth and expansion.