What is Follow on Public Offer (FPO)?

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About Follow on Public Offer (FPO):

What is it? FPO is a process wherein a company already listed on a stock exchange issues new shares to existing investors or shareholders.
It is also known as a secondary offering.
Purpose:
FPO allows a company to raise additional funds through the issuance of new shares.
Companies use FPOs to diversify their equity base and raise capital for business.
This capital can be used for multiple purposes, such as to meet the company’s expenses, business expansion, debt reduction, etc.
Types of FPO:
Dilutive FPO:
It is when a company issues additional shares and offers them to the public.
It increases the number of outstanding shares of the company.
As the number of shares increase, the earnings per share (EPS) decrease.
Funds raised from such an FPO are allocated for expansion activities or to pay debts.
Non-dilutive FPO:
It is when shares that are already in existence are issued to the public.
It is when existing shareholders, like directors or founders, sell their shares and offer them to the public.
Non-dilutive FPOs are used to change the shareholding ownership.
At-the-market offering:
It is a type of FPO in which a company offers secondary public shares on any given day to raise capital, mostly depending on the prevailing market price.
An at-the-market (ATM) offering gives the issuing company the ability to raise capital as needed.

What is Initial Public Offer (IPO)?

When a private company first sells shares of stock to the public, this process is known as an initial public offering (IPO).
An IPO means that a company’s ownership is transitioning from private ownership to public ownership.

Q1) What is Rights issue?

A rights issue is an invitation to existing shareholders to purchase additional new shares in the company. In a rights offering, each shareholder receives the right to purchase a pro-rata allocation of additional shares at a specific price and within a specific period

Source: Explained | What made the Adani Group call off its FPO?