Definition of Follow on Public Offering (FPO)

If an already listed company issues fresh securities to the public or makes an offer for sale, then it is known as Follow on Public Offering (FPO). In such a scenario, an offer for sale is allowed only if the company satisfies the continuous listing obligations.

Points to remember:

• An FPO is a popular method to raise additional capital for the company from the market.
• Shareholders usually react negatively to FPOs because it leads to dilution of existing shares.
• FPOs prove to be beneficial for investment banks as they are able to charge a trading fee from the company getting listed.