FPO: FOLLOW ON PUBLIC OFFERING

(SECONDARY IPO)

Follow-on Public Offering, commonly known as FPO, stands

as a significant milestone in a company’s journey, especially
in the realm of public trading. In essence, it is a process
through which a publicly traded company issues new shares
to the market, bolstering
its capital base and often
financing expansion, debt
reduction, or other
strategic initiatives. FPO is
often regarded as a
secondary Initial Public
Offering (IPO) due to its
similarity in principle.

How FPO Works:

During an FPO, a company that is already listed on a stock

exchange decides to raise additional capital. Instead of
issuing new shares to private investors or institutions, the
company offers these new shares to the existing
shareholders and the public. This move allows the company
to tap into the public market for funds while giving existing
shareholders an opportunity to increase their stake or new
investors to join the ownership ranks.

Example :-
Certainly! One of the notable examples of an FPO in India is
the State Bank of India’s (SBI) Follow-on Public Offering in
2014. SBI, India’s largest bank, decided to raise capital to
strengthen its balance sheet and support future growth
initiatives.

State Bank of India (SBI) FPO 2014:

In 2014, SBI launched an FPO where it issued additional

shares to the public and existing shareholders. The bank
offered over 31.3 crore shares at a price of Rs 1,565 per
share. This FPO aimed to raise funds for the bank’s
expansion plans, lending activities, and meeting regulatory
requirements.Existing shareholders of SBI and the general
public were able to participate in this offering. The FPO
garnered significant attention from investors and
contributed to SBI’s capital base, allowing the bank to
strengthen its position in the market and support the
country’s economic development through increased lending
and financial services.

Conclusion:

In the dynamic world of finance, FPOs serve as vital tools for

companies seeking to grow and prosper. By opening new
avenues for investment and expansion, FPOs foster a
healthy ecosystem where businesses can thrive, innovate,
and create value for their stakeholders. As investors
participate in these offerings, they not only contribute to the
company’s growth but also potentially reap the rewards of a
flourishing enterprise.
Reference

1- Data collected from different websites through Google.

2- Example collected from SBI Website

By Abhisek Das