Recent IPOs That Made Waves: Understanding the Key Differences Between IPO and FPO

IPOs have long been recognised as appealing investment opportunities for those looking to invest in promising companies at an early stage. The allure is in the possibility of significant growth and higher stock values as the company receives new funds.

Let's look at some of the most recent IPOs in 2023:

  • Northern Arc Capital Ltd. IPO: Northern Arc Capital Ltd., founded in 1989, is a non-banking financial institution specialising in meeting lending requirements and providing loans to the underbanked population. 
  • Biba IPO: In 1986, Biba, a popular clothing brand specialising in ethnic women's clothing, went public. Their IPO offers 90 crore from new issues and 2.7 crore equity shares from existing stakeholders in an offer for sale. Salwar kameez dupattas, mix-and-match wear, ready-to-stitch wear, kidswear, bottom-wear, and accessories are all available from the brand.
  • Snapdeal IPO: Snapdeal, a major e-commerce brand, has a strong market presence across multiple categories, including apparel, fashion, household goods, electronics, beauty, and personal care. The company primarily serves Indian tier II and III cities. Snapdeal's IPO is worth Rs. 1,250 crore, which includes Rs. 1,250 crore in new issues and Rs. 30,769,600 in equity shares for sale.
  • Navi Technologies IPO: Navi Technologies is a technology-driven financial company (Fintech) that provides financial products and services to India's middle class. Their IPO seeks 3,350 crores without offering any equities for sale. 

The key difference between IPO and FPO:

  • Definition: An IPO is the first time a privately held company issues shares to the public in order to become a publicly traded company. An FPO, or Follow-on Public Offering, occurs when a previously listed company issues new shares to the public.
  • Purpose: The primary goal of an IPO is to raise capital for a company's growth and expansion plans, while also allowing early investors and founders to exit or monetize their investments. FPOs, on the other hand, are frequently used by publicly traded companies to raise additional funds for a variety of reasons, including debt repayment, business expansion, or acquisitions.
  • Timing: IPOs typically take place when a company believes it is ready to go public and has met all of the necessary regulatory requirements. FPOs can happen at any time after a company is first listed.
  • Prospectus: During an IPO, a detailed prospectus is prepared and filed with regulatory authorities to provide essential information about the company to potential investors. The company may issue a prospectus or offer document in an FPO, but it may be less extensive than in an IPO.
  • Pricing: The price of shares in an IPO is frequently determined through a book-building process in which investors bid for shares within a specified price range. The price of an FPO is usually fixed or determined through a subsequent book-building process.

 

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