Distinguish between Initial Public Offer (IPO) and Further Public Offer (FPO).

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Q.4 (2) Distinguish between Initial Public Offer (IPO) and Further Public Offer (FPO).

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Answer: Distinction between Initial Public Offer (IPO) and Further Public Offer (FPO) PointInitial Public Offer (IPO)Further Public Offer (FPO) MeaningThe first offer of securities by an unlisted company to the public.An offer of further securities to the public by a company that is already listed. IssuerAn unlisted company, often a new company or one going public for the first time.A listed company whose shares are already traded on a stock exchange. ListingShares are listed on the stock exchange for the first time after the IPO.Shares are already listed; new shares are added to the listed lot. PurposeTo raise capital and get listed, i.e. go public.To raise additional capital for expansion or to reduce debt. Price discoveryNo market price is available; price is fixed by book building or fixed price on the basis of estimates.Price is fixed with reference to the existing market price of the shares. Risk to investorHigher, as there is no past market record of the shares.Lower, as the company’s trading record and performance are known. Effect on ownershipOwnership is opened to the public for the first time.Shareholding of existing shareholders gets diluted.

Distinguish between Initial Public Offer (IPO) and Further Public Offer (FPO).

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Point	Initial Public Offer (IPO)	Further Public Offer (FPO)
Meaning	The first offer of securities by an unlisted company to the public.	An offer of further securities to the public by a company that is already listed.
Issuer	An unlisted company, often a new company or one going public for the first time.	A listed company whose shares are already traded on a stock exchange.
Listing	Shares are listed on the stock exchange for the first time after the IPO.	Shares are already listed; new shares are added to the listed lot.
Purpose	To raise capital and get listed, i.e. go public.	To raise additional capital for expansion or to reduce debt.
Price discovery	No market price is available; price is fixed by book building or fixed price on the basis of estimates.	Price is fixed with reference to the existing market price of the shares.
Risk to investor	Higher, as there is no past market record of the shares.	Lower, as the company’s trading record and performance are known.
Effect on ownership	Ownership is opened to the public for the first time.	Shareholding of existing shareholders gets diluted.