IPO vs. FPO: What's the Difference?
Edited by Sumera Saeed || By Sawaira Riaz || Updated on November 17, 2023
IPO refers to the first sale of stocks by a company to the public, while FPO represents a subsequent issuance of shares to the public after the IPO.
Key Differences
An IPO, or Initial Public Offering, is the mechanism through which a company goes public for the first time by issuing its shares to the public. It represents the first sale of stocks by the company to public investors. On the other hand, an FPO, or Follow-on Public Offering, takes place after the company is already publicly traded. When companies need to raise additional capital, they opt for an FPO to issue more shares to the public.
Sawaira Riaz
Nov 16, 2023
With an IPO, a previously private company transitions into a publicly-traded entity, allowing it to tap into a larger pool of potential capital from public investors. The IPO process involves multiple stages, including selecting underwriters, setting a price band, and listing on an exchange. Conversely, the FPO is simpler as the company is already familiar with the public offering process.
Sawaira Riaz
Nov 16, 2023
Investors often view IPOs with keen interest as they offer an opportunity to invest in a company's shares at the ground floor. In contrast, an FPO might not attract the same level of interest since the company's shares are already in circulation. Nevertheless, an FPO provides existing shareholders and potential investors an opportunity to adjust their holdings or enter the stock at a potentially different valuation.
Sawaira Riaz
Nov 16, 2023
The primary motive behind an IPO is to raise capital for expansion, pay off debts, or provide liquidity to existing shareholders. FPOs, meanwhile, are usually driven by a company's need for additional funds post going public, which can be for a variety of reasons including expansion, acquisitions, or debt repayment. Both IPOs and FPOs are critical tools in a company's financial strategy, aiding in capital acquisition and facilitating growth.
Janet White
Nov 16, 2023
Comparison Chart
Definition
First sale of stocks by a company to the public.
Subsequent issuance of shares by a publicly-traded company.
Sawaira Riaz
Nov 16, 2023
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Occurrence
Takes place when a company goes public for the first time.
Happens after the company is already publicly traded.
Sawaira Riaz
Nov 16, 2023
Primary Objective
Raise capital, expansion, pay off debts.
Raise additional funds, expansion, debt repayment.
Sawaira Riaz
Nov 16, 2023
Investor Perception
Opportunity to invest at the ground floor.
Adjust holdings or invest at a different valuation.
Sawaira Riaz
Nov 16, 2023
Complexity
Involves multiple stages like selecting underwriters.
Simpler as the company is familiar with the public offering.
Sawaira Riaz
Nov 16, 2023
IPO and FPO Definitions
IPO
Initial Public Offering representing a company's debut in the stock market.
Investors eagerly awaited the company's IPO announcement.
Sawaira Riaz
Oct 25, 2023
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FPO
An offering of shares after the company's initial public listing.
The company used the FPO proceeds for research and development.
Sawaira Riaz
Oct 25, 2023
IPO
A company's first sale of equity to public investors.
The successful IPO enabled the company to raise significant capital.
Sawaira Riaz
Oct 25, 2023
FPO
Secondary stock issuance by a company to meet financial objectives.
Their recent FPO was a strategic move to strengthen the balance sheet.
Sawaira Riaz
Oct 25, 2023
IPO
The process by which a previously private company becomes publicly traded.
The firm's IPO was oversubscribed within hours of its launch.
Sara Rehman
Oct 25, 2023
FPO
A method for publicly-traded companies to raise additional capital.
Given their debt situation, an FPO seemed like a feasible solution.
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Oct 25, 2023
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IPO
The first issuance of stock shares to the public by a company.
The tech startup decided to go public through an IPO.
Sawaira Riaz
Oct 25, 2023
FPO
Follow-on Public Offering, a subsequent stock issuance post an IPO.
The company's FPO was aimed at acquiring a competitive firm.
Sawaira Riaz
Oct 25, 2023
IPO
The mechanism allowing companies to tap into public markets for funding.
The organization's growth strategy heavily relied on its upcoming IPO.
Sara Rehman
Oct 25, 2023
FPO
Issuance of shares to the public by an already publicly traded company.
To finance their expansion, the corporation launched an FPO.
Sawaira Riaz
Oct 25, 2023
FAQs
When can a company issue an FPO?
A company can issue an FPO after it's already publicly traded and needs to raise additional capital.
Harlon Moss
Nov 16, 2023
Can a company have multiple FPOs?
Yes, a company can have multiple FPOs whenever it needs to raise more funds.
Aimie Carlson
Nov 16, 2023
How are IPO prices determined?
IPO prices are typically determined by underwriters through book-building or fixed price methods.
Aimie Carlson
Nov 16, 2023
Are IPOs available to retail investors?
Yes, IPOs are typically open to institutional, retail, and other investor categories.
Aimie Carlson
Nov 16, 2023
What is an IPO?
An IPO, or Initial Public Offering, is the first sale of stocks by a company to the public.
Sawaira Riaz
Nov 16, 2023
Is IPO a one-time process?
Yes, IPO is a one-time event where a company goes public, while FPOs can occur multiple times.
Sawaira Riaz
Nov 16, 2023
Why do companies opt for an IPO?
Companies choose IPOs to raise capital, provide liquidity to shareholders, expand, or pay off debts.
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Nov 16, 2023
Can a company withdraw its FPO?
Yes, based on certain conditions or lack of interest, a company can withdraw its FPO.
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Nov 16, 2023
How does FPO differ from IPO?
FPO, or Follow-on Public Offering, is a subsequent issuance of shares by a company that's already publicly traded.
Sawaira Riaz
Nov 16, 2023
Is investing in an IPO riskier than an FPO?
IPOs can be riskier due to lack of historical trading data, while FPOs have established market presence.
Janet White
Nov 16, 2023
Who can participate in an FPO?
Existing shareholders and new investors can participate in an FPO.
Aimie Carlson
Nov 16, 2023
How soon can a company launch an FPO after its IPO?
There's no fixed timeframe, but a company generally waits to ensure stability post-IPO before launching an FPO.
Sara Rehman
Nov 16, 2023
Are IPOs always successful?
No, IPOs can underperform or get undersubscribed based on market conditions and company fundamentals.
Sara Rehman
Nov 16, 2023
Can international investors participate in an IPO?
Yes, but it depends on the regulatory environment and the company's offer document.
Janet White
Nov 16, 2023
Why might a company prefer FPO over taking on debt?
FPOs don't increase debt obligations and avoid interest costs, making them preferable in certain scenarios.
Harlon Moss
Nov 16, 2023
Is an FPO always at a fixed price?
No, FPOs can be at a fixed price or through a book-building process.
Janet White
Nov 16, 2023
Why might a company's stock price fluctuate post-FPO?
Stock prices can fluctuate due to market perception, use of FPO proceeds, and overall market conditions.
Sara Rehman
Nov 16, 2023
How can I invest in an IPO?
You can invest in an IPO through brokerage firms during the subscription period.
Sara Rehman
Nov 16, 2023
Do FPOs dilute company ownership?
Yes, FPOs can dilute existing shareholders' ownership if they don't participate proportionally.
Aimie Carlson
Nov 16, 2023
How are IPO funds utilized?
IPO funds can be used for various purposes like expansion, acquisitions, or debt repayment as specified in the offer document.
Harlon Moss
Nov 16, 2023
About Author
Written by
Sawaira RiazSawaira is a dedicated content editor at difference.wiki, where she meticulously refines articles to ensure clarity and accuracy. With a keen eye for detail, she upholds the site's commitment to delivering insightful and precise content.
Edited by
Sumera SaeedSumera is an experienced content writer and editor with a niche in comparative analysis. At Diffeence Wiki, she crafts clear and unbiased comparisons to guide readers in making informed decisions. With a dedication to thorough research and quality, Sumera's work stands out in the digital realm. Off the clock, she enjoys reading and exploring diverse cultures.
