What is an IPO?

An Initial Public Offering (IPO) is when a privately held company raises capital by offering its shares to the public for the first time. Once listed, the company’s shares become available for trading on stock exchanges like NSE or BSE. IPOs allow businesses to raise funds for expansion, repay debt, or invest in new projects.

For example, recent SME IPOs like Dev Accelerator IPO and Karbonsteel Engineering IPO have generated strong investor interest, showcasing the popularity of IPOs in India.

Key Features of an IPO:

  • Company issues shares for the first time.
  • Investors can subscribe during the open bidding period.
  • Shares get listed on exchanges post allotment.
  • Pricing is either fixed or book-built (price band system).

What is an FPO?

A Follow-on Public Offering (FPO) happens when a company that is already listed on the stock exchange issues additional shares to the public. This helps raise extra capital for growth, acquisitions, or debt repayment.

Unlike IPOs, where investors evaluate a company with limited public data, FPOs allow investors to review the company’s performance track record before investing. This makes FPOs relatively less risky.

Key Features of an FPO:

  • Issued by companies already listed in the market.
  • Can dilute promoter holding or bring in fresh funds.
  • Generally considered less risky than IPOs as past financial performance is available.

IPO vs FPO – The Key Differences

Basis IPO FPO
Meaning First-time public issue of shares Additional issue by already listed company
Risk Level Higher – company has no trading history Lower – performance track record is available
Objective Raise funds for expansion, growth, debt repayment Raise more capital, reduce debt, or fund acquisitions
Investor Base New investors entering company ownership Existing and new investors can participate

Why Do Companies Go for IPO or FPO?

  • Fundraising: For expansion, R&D, or acquisitions.
  • Brand Visibility: Being listed increases credibility.
  • Liquidity: Provides exit opportunities for early investors and promoters.

We’ve seen similar objectives in recent SME offerings like Current Infraprojects IPO and Anondita Medicare IPO, where funds are being raised for expansion and working capital needs.

Risks Involved

  • IPO: Pricing risk, market volatility, unproven track record.
  • FPO: Dilution of shareholding, possible pressure on share price.

Investor Takeaway

Both IPOs and FPOs offer investors opportunities to invest in companies at different stages of growth. IPOs allow entry at an early stage but come with higher risks. FPOs are safer since companies already have public financial history. A balanced approach with proper research is key.

For deeper insights, explore our coverage of recent IPOs like Galaxy Medicare IPO and Dev Accelerator IPO.

Disclaimer: This article is for educational purposes only and not financial advice. Please consult a registered financial advisor before investing.

⚠ Disclaimer: Not Financial Advice The information provided on GMP Radar is for educational and informational purposes only. We are not SEBI-registered financial advisors. IPO GMP (Grey Market Premium) is a volatile and unregulated market indicator. Investors should conduct their own research and consult a certified financial advisor before making any investment decisions based on the content of this blog.
Suraj P. Choudhary

About the Author Founder & Market Analyst

Suraj P. Choudhary is the founder of GMP Radar. With a robust professional background as a Shift Incharge in Instrumentation and Automation, Suraj brings an engineer's precision to the financial markets.

He specializes in decoding Grey Market Premiums (GMP) and conducting technical analysis for IPOs. His mission is to cut through the market noise and provide retail investors with transparent, data-backed insights for smarter decision-making.