| Definition |
The first time a company offers its shares to the public. |
A subsequent public offering by a company already listed. |
| Purpose |
To raise capital and become publicly listed. |
To raise additional capital for expansion, debt repayment, etc. |
| Company Status |
Unlisted company entering the stock market. |
Already listed company issuing more shares. |
| Investor Risk |
Higher risk due to lack of historical trading data. |
Lower risk as company performance is already known. |
| Market Reaction |
Highly anticipated and may be volatile. |
Less hyped compared to IPOs. |
| Pricing |
Determined through book-building or fixed price method. |
Based on current market price and company fundamentals. |
| Disclosure Requirements |
Extensive disclosures required in red herring prospectus. |
Disclosure requirements are still present but less rigorous. |
| Frequency |
Occurs once in a company’s lifetime. |
Can occur multiple times after listing. |
| Investor Interest |
Attracts both institutional and retail investors heavily. |
May attract more informed and long-term investors. |
| Use of Funds |
Primarily for growth, infrastructure, and expansion. |
For additional funding needs, often for debt repayment or working capital. |
| Public Participation |
General public gets access to the company’s shares for the first time. |
Public already owns shares; more are added to float. |
| Regulatory Approval |
Must be approved by SEBI and other authorities. |
Also requires regulatory approval, but is more streamlined. |
| Ownership Dilution |
Founders dilute part of their stake to bring in investors. |
Further dilution of promoter holdings or issue of new shares. |
| Share Price Impact |
IPO price sets initial market valuation. |
May cause temporary pressure on existing share price. |
| Example |
LIC IPO in 2022 – first time shares offered to public. |
Yes Bank’s FPO in 2020 after it was already listed. |
| Demand Uncertainty |
Uncertain demand; can be under- or over-subscribed. |
Demand based on past performance and market trust. |
| Investor Type |
Attracts speculative and first-time investors. |
Appeals more to long-term and value investors. |
| Listing Gains |
High potential for listing-day gains or losses. |
Less likely to have sharp listing-day movement. |
| Prospectus Type |
Red Herring Prospectus is issued. |
Offer document or shelf prospectus may be used. |
| Risk Disclosure |
Extensive risk factors are disclosed initially. |
Updates on current risks and company standing are shared. |
| Impact on Shareholding |
Creates new public shareholders for the first time. |
Increases public float and may reduce promoter holding. |
ipo vs fpo