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.Â
- 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.Â
- 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.Â
- Unlike a diluted IPO, this method does not increase or decrease the company’s number of shares.Â
FPO vs IPO
            However, the FPO process is more cost-effective when compared to an IPO.
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Source:TOI