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IPO vs. FPO — What's the Difference?

By Tayyaba Rehman — Published on October 11, 2023
An IPO (Initial Public Offering) is the process by which a company goes public by selling its shares to the public for the first time, whereas an FPO (Follow-on Public Offering) is when an already public company issues new shares to investors.

Difference Between IPO and FPO

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Key Differences

While IPOs are significant for setting the initial market price of the company’s shares, based on investor demand and perception of the company’s value, FPOs do not have the same impact on share pricing. The market price in an FPO is typically already influenced by the existing share performance and market conditions.
Tayyaba Rehman
Oct 11, 2023
In the context of investor opportunities, an IPO often attracts considerable attention as it presents a chance to buy the company’s shares at the initial offering price, potentially gaining from future growth. In contrast, FPOs may not generate the same level of excitement, but they still provide an opportunity for investment in a company whose performance can be evaluated based on its track record in the public market.
Tayyaba Rehman
Oct 11, 2023
In essence, while both IPO and FPO are instrumental in capital raising, they occur at different stages in a company’s journey with IPO marking the transition from private to public and FPO occurring subsequently when additional capital is needed.
Tayyaba Rehman
Oct 11, 2023
The IPO serves as a gateway for private companies to access public capital markets, often marking a pivotal moment in a company’s lifecycle. On the contrary, an FPO is not about debuting in the stock market but rather about leveraging the existing status to procure additional funds, allowing the already public company to further its business objectives.
Tayyaba Rehman
Oct 11, 2023
An IPO, or Initial Public Offering, is a critical event for a private company intending to go public, allowing it to sell its shares to the public for the first time. In contrast, an FPO, or Follow-on Public Offering, occurs when a company that is already publicly listed decides to issue additional shares to raise capital, often for expansion, debt reduction, or other corporate purposes.
Tayyaba Rehman
Oct 11, 2023
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Comparison Chart

Definition

Process by which a private company offers shares to the public for the first time.
Process where an already public company issues additional shares to investors.
Tayyaba Rehman
Oct 11, 2023

Stage

Occurs when a company goes public.
Occurs after the company is already public.
Tayyaba Rehman
Oct 11, 2023

Pricing Impact

Sets the initial market price of the company’s shares.
Price is generally influenced by existing market conditions and share performance.
Tayyaba Rehman
Oct 11, 2023

Investor Appeal

Often high due to the novelty and potential for profit.
May be lower, but offers a track record for evaluation.
Tayyaba Rehman
Oct 11, 2023

Purpose

To go public and raise capital from the public market for the first time.
To raise additional capital after the company is already public.
Tayyaba Rehman
Oct 11, 2023
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Definitions

IPO

IPO marks the transition of a company from private to public.
Through the IPO, Company Y was successful in raising the capital needed for expansion.
Tayyaba Rehman
Sep 27, 2023

FPO

FPO is the issuance of shares by a publicly traded company to raise additional capital.
The funds from the FPO enabled Company C to pay down its existing debt efficiently.
Tayyaba Rehman
Sep 27, 2023

IPO

IPO sets the initial value of the company in the public market.
The successful IPO established a strong market presence for Company A.
Tayyaba Rehman
Sep 27, 2023

FPO

FPO represents an opportunity for investors to invest in a company with a public track record.
Investors showed keen interest in Company G’s FPO due to its solid performance in the stock market.
Tayyaba Rehman
Sep 27, 2023

IPO

IPO is the debut of a company’s stock in the public market.
Company X’s IPO attracted substantial investor interest due to its promising prospects.
Tayyaba Rehman
Sep 27, 2023

FPO

FPO is a subsequent stock offering post the company's initial public offering.
Through the FPO, Company E successfully garnered additional investment for its projects.
Tayyaba Rehman
Sep 27, 2023

IPO

IPO is a way for companies to raise capital by selling shares to public investors.
Company B’s IPO was oversubscribed, reflecting high demand for its shares.
Tayyaba Rehman
Sep 27, 2023

FPO

FPOs are conducted by public companies to infuse fresh equity.
Company F’s FPO helped in diversifying the investor base and improving the company’s financial health.
Tayyaba Rehman
Sep 27, 2023

IPO

IPO is the initial sale of stock shares by a company to the public.
The IPO allowed early investors in Company Z to realize significant gains.
Tayyaba Rehman
Sep 27, 2023

FPO

FPO allows already public companies to offer new shares to investors.
The FPO was launched by Company D to finance its ambitious expansion plans.
Tayyaba Rehman
Sep 27, 2023

IPO

A corporation's first offer to sell stock to the public
Tayyaba Rehman
Sep 27, 2023

FAQs

How is the price determined in an IPO?

The price in an IPO is determined based on the perceived value of the company, investor demand, and other market conditions.
Tayyaba Rehman
Oct 11, 2023

What is an IPO?

An IPO, or Initial Public Offering, is when a company offers its shares to the public for the first time.
Tayyaba Rehman
Oct 11, 2023

What is an FPO?

An FPO, or Follow-on Public Offering, is when an already public company issues additional shares to raise more capital.
Tayyaba Rehman
Oct 11, 2023

Why do companies go for IPO?

Companies opt for IPO to raise capital for expansion, reduce debt, and gain access to public markets for further financial flexibility.
Tayyaba Rehman
Oct 11, 2023

Is the price fixed in an FPO?

In an FPO, the price is generally influenced by the existing market conditions and the performance of the company’s shares.
Tayyaba Rehman
Oct 11, 2023

What happens to the existing share price during an FPO?

The existing share price can be affected by an FPO, often diluting the value as more shares are introduced into the market.
Tayyaba Rehman
Oct 11, 2023

When can a company issue an FPO?

A company can issue an FPO after it’s already public, usually to raise additional funds for various corporate purposes.
Tayyaba Rehman
Oct 11, 2023

Why would a company choose FPO over IPO?

A company can only choose FPO over IPO if it's already public and needs to raise additional capital.
Tayyaba Rehman
Oct 11, 2023

Is investing in an IPO risky?

Investing in an IPO can be risky as the company does not have a track record in the public market, making it challenging to assess its future performance.
Tayyaba Rehman
Oct 11, 2023

Can I invest in an FPO like an IPO?

Yes, you can invest in an FPO, and it allows you to assess the company based on its performance in the public market.
Tayyaba Rehman
Oct 11, 2023

How does an FPO impact a company’s capital structure?

An FPO alters the company’s capital structure by increasing the equity base, potentially diluting earnings per share.
Tayyaba Rehman
Oct 11, 2023

Can investing in IPO be profitable?

Investing in IPOs can be profitable if the company performs well post-listing, but it also comes with substantial risk due to uncertainties.
Tayyaba Rehman
Oct 11, 2023

Author Spotlight

Written by
Tayyaba Rehman
Tayyaba Rehman is a distinguished writer, currently serving as a primary contributor to askdifference.com. As a researcher in semantics and etymology, Tayyaba's passion for the complexity of languages and their distinctions has found a perfect home on the platform. Tayyaba delves into the intricacies of language, distinguishing between commonly confused words and phrases, thereby providing clarity for readers worldwide.

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