Public Issue of shares

About Public Issue of shares:

When a company raises funds by selling or issuing its equity shares to the public through an offer document it is called a public issue.
- Initial Public Offerings (IPO): IPO is a type of issue where an unlisted company raises capital by making a fresh issue of securities or offering its existing securities for sale to the public for the first time.
- Further Public Offer (FPO) / Follow-on Public Offer (FPO): When a listed company wants additional capital, it makes either a fresh issue of securities or an offer for sale of existing securities to the public it is called a Follow-on Public Offer (FPO).
- Offer for Sale (OFS):
  - Institutional investors like venture funds, private equity funds etc. invest in a company at its nascent stage.
  - Once the company grows bigger these investors sell their shares to the public through the issue of offer document and subsequently shares get listed on the stock exchange.
  - Offer for sale (OFS) is also a special mechanism through which the promoters can sell their stake in the market.
  - Only promoters or shareholders holding more than 10% of the share capital in a company can come up with such an issue.
- Both retail and institutional investors can invest in an OFS and buy shares of the Company.

Q1) What is a Follow-on Public Offer (FPO)?

When a listed company wants additional capital, it makes either a fresh issue of securities or an offer for sale of existing securities to the public; it is called a Follow-on Public Offer (FPO).