Follow-on Public Offer(FPO)

In News

• Recently, Adani Enterprises canceled its Rs 20,000 crore Follow-on Public Offer.
  • It came after the shares of the firm declined following allegations of accounting fraud by US short-seller Hindenburg Research.

What is a Follow-on Public Offering (FPO)?

• A Follow-on Public Offering (FPO) is the issuance of shares to investors by a company listed on a stock exchange. 
• FPOs are also known as secondary offerings.
• Companies may use an FPO to reduce debt or raise more capital for expansion.
• They typically occur after the company has completed an initial public offering (IPO) to make its shares available to the public.

Types of FPO’S

• Dilutive FPO:

• This is the process where the company issues additional fresh shares to the public to raise capital. 
• It results in increasing the company’s total outstanding shares, decreasing the Earnings Per Share (EPS).

• Non-Dilutive FPO:
  •  A non-diluted FPO is when the company’s largest shareholders, such as the founders or board of directors, offer the shares they hold privately to the general public. 
  • Unlike a diluted IPO, this method does not increase or decrease the company’s number of shares. 

Source:TOI