What is the difference between FPO & IPO?

Every business entity needs funds to fund their day-to-day operations. There are two options for funding the business: equity or debt. In the form of equity, or through debt which is the company's borrowed capital. When the entity sells its shares to a set price, it is called IPO. On the other hand, FPO is used to refer to the sale of shares for the public contribution.

It is important to be familiar with FPO and IPO. This knowledge is useful in today's stock market. Also, let us discuss FPO vs. IPO below.

Definition of an IPO

IPO stands for Initial Public Offer. IPO is the process by which a company seeks to be listed on the stock exchange. It is the first investment of a company to raise funds through IPO.

FPO Definition

FPO stands for Follow-On Public Offer. FPO is a public offering of shares that follows an IPO. FPO is a public offering of shares to all investors by a publicly traded company. To raise more funds FPO is listed by the company. The company offers a prospectus.

Two types of FPO exist:

• Dilutive offering
• Non-Dilutive Offering

Now we know what an IPO is and what FPO is. Let's learn the differences between FPO and IPO, and then compare FPO and IPO. Fund flow is essential for a company's growth and operation. Fund flow is essential for any company, not just start-ups. But even established companies need funds to continue their operations and expand. The owner of the company may not be able to provide constant funds, so issuing shares to the public the best way to raise capital.

FPO vs. IPO: Key difference

• IPO is the first public offering of shares by a private company, while FPO is the second or later public offering of shares by a publicly listed company.
• FPO is available with the aim of inflowing public capital. IPO is a release with the intention of raising capital through public investments.
• FPO is more risky than an IPO because the individual investors are not aware of what might happen to the company in the future. FPO is more transparent as investors know the company's past performance and are already listed on the stock exchange. Investors can therefore examine the company's past performance and make predictions about its future growth prospects.