IPO vs FPO: Acronyms such as IPO and FPO tend to be confusing when you are attempting to navigate the realm of public offerings. Although they sound like something similar, the two financial instruments have different purposes and are for different needs.
An Initial Public Offering (IPO) is a company’s first entry in the stock market, while a Follow-on Public Offering (FPO) is an additional share offered by a listed firm.
Knowing the differences between IPOs and FPOs may assist prospective investors in making informed choices.
Add Zee Business as a Preferred Source
The following is a list of 5 major differences between IPOs and FPOs:
1) Definition:
An IPO is the initial public offering of shares by a company so that it can shift from private to public and enable it to raise funds.
While an FPO, otherwise known as a secondary offering, is an extra issue of shares provided by a company already present in the listed sphere. The primary reason behind an FPO is to mobilise more funds for its expansion.
2) Company stage:
An IPO is floated by an unlisted company that desires a public issue. In contrast, an FPO is floated by a listed company in need of further capital for financial needs, like the repayment of outstanding debt or expansion.
Read More: IPO bidding myths: 4 points why applying multiple times will not improve your allotment chance
3) Price:
An IPO is generally priced at a fixed or variable price band determined by the company and investment banks.
On the contrary, FPO shares are offered to the public at a discount to the market price. The shares are priced in such a way as to attract potential investors.
4) Risk:
While FPOs are regarded as relatively less risky because the company is already listed and has a financial track record, IPOs are generally considered riskier due to limited financial history and no prior market performance.
5) Purpose:
Firms float IPO to typically raise capital for growth, repayment of debts, or other corporate requirements. Whereas through FPO, the firm targets raising more capital for expansion, debt repayment, or other strategic reasons.
IPO vs FPO: Examples
a) Tata Capital (2025): The Initial Public Offer (IPO) for public subscription began on October 6, between a price band of Rs 310 to Rs 326 per share, with a plan to collect Rs 15,511.87 crore through a fresh issue of Rs 6,846 crore and an Offer for Sale (OFS) of Rs 8,665.87 crore.
b) Vodafone Idea (2024): FPO raised Rs 18,000 crore in April 2024 from a fresh issue of almost 1636 crore shares without any recourse to the company. The price band for the FPO was Rs 11 per share.
The funds were utilised to decrease debt and enhance the financial health of the telecom firm, and the issue was significantly oversubscribed.
Is LG’s IPO an FPO?
LG Electronics India floated its IPO of Rs 11,607 crore on October 7, with a price band of Rs 1,080 to 1,140 per share, putting the company’s worth at approximately Rs 77,400 crore at the top of the price band.
No, the LG Electronics IPO is not an FPO. It is an initial public offering (IPO) by means of an Offer for Sale (OFS) through shares of the parent company, LG Electronics Inc.
The parent company is offering its existing shares in LG Electronics India to the public, not the Indian subsidiary issuing fresh shares to mobilise capital.
Even though the parent company is listed on several stock exchanges, its subsidiary company, LG Electronics India’s public offer, cannot be regarded as an FPO on account of two primary reasons:
1) Separate entity: A subsidiary company is treated as a separate legal entity from that of its parent company. Hence, even if the parent company is listed, the IPO of the subsidiary is regarded as a fresh listing.
2) Listing status: The IPO of the subsidiary company will lead to its share being listed for the first time on the Indian stock exchange, and thus makes it an IPO.
