Understand FPO (Follow-on Public Offer)

1.3.8 · Stock-Market › Primary vs Secondary Market & IPOs

FPO HAI KYA?

Sabse badi baat ek word mein: already listed.

Feature	IPO	FPO
Company status	Unlisted (pehli baar public ja rahi hai)	Already listed
Price discovery	Koi market price exist nahi karti abhi	Market price pehle se exist karti hai
Investor ko risk	Zyada (exchange par koi track record nahi)	Kam (public financials + price history)
Purpose	Pehli baar capital raise	Additional capital raise ya existing-holder sale

COMPANIES FPO KYUN KARTI HAIN?

Fresh capital raise karna — expansion fund karna, debt chukana, working capital.
Promoters/early investors ko exit dena — woh apni holding ka kuch hissa bechte hain.
Regulatory minimum public shareholding meet karna — India mein SEBI ≥25% public holding require karti hai; promoters apni stake pare down kar sakte hain comply karne ke liye.

Yeh purpose offer ka type decide karta hai:

DILUTION KAISE KAAM KARTA HAI — first principles se derive karo

Hum "EPS girta hai" yaad nahi karte. Hum derive karte hain kyun.

Figure — Understand FPO (Follow-on Public Offer)

Common Mistakes (Steel-manned)

Active Recall

Recall Reveal karne se pehle jawab do

Q: Ek company dilutive FPO mein unchanged earnings ke saath 20% zyada shares issue karti hai. EPS kitna girta hai?

A: Dilution factor $= \frac{N}{1.2 N} = 0.833$ , toh EPS purane ka 83.3% ho jaata hai → 16.7% drop.

Recall Feynman: ek 12-saal ke bachche ko samjhao

Ek pizza shop socho jiske 10 dost owner hain, profit ka ek slice har ek ko. Dilutive FPO: woh 2 naye dost invite karte hain aur pizza ko 12 chhote slices mein kaatते hain — sabka slice chhhota ho jaata hai (yahi EPS girna hai), lekin shop ko ek bada oven khareedne ke liye nayi money mili. Non-dilutive sale: ek dost apna slice kisi anjaan ko bech deta hai — abhi bhi 10 slices hain, same size, lekin dost pocket karta hai cash, pizza shop nahi. Aur kyunki sab already menu par aaj ki slice-price dekh sakte hain, woh nayi slice tabhi khareedenge jab thodi sasti ho.

Flashcards

FPO kya hai?

Ek aise company dwara shares ka public issue jo already listed hai stock exchange par, IPO ke baad — ya nayi shares issue karke ya existing holders ko bechne deke.

IPO aur FPO ke beech key difference kya hai?

IPO ek unlisted company ka (pehla offer, koi market price nahi); FPO ek already-listed company ka (market price pehle se exist karti hai).

Dilutive FPO kya hota hai?

Company nayi shares issue karti hai, total share count badhta hai; EPS girta hai aur paisa company ko jaata hai.

Non-dilutive FPO kya hota hai?

Ek FPO jisme existing shareholders apni khud ki shares bechते hain; share count aur EPS unchanged; paisa sellers ko jaata hai, company ko nahi.

Kya OFS FPO ka subtype hai?

Nahi — India mein Offer for Sale (OFS) ek alag secondary-sale mechanism hai (existing holders ke liye shares bechne ka ek alag exchange window), FPO ka legal subtype nahi, haalaanki economically yeh bhi non-dilutive hai.

FPO usually current market price par ya neeche kyun price hota hai?

Kyunki live market price pehle se exist karti hai — investors open market mein khareed lete jab tak FPO ek attractive (discounted) price offer na kare.

EPS ka formula aur dilution kyun hoti hai?

EPS = E / N

; unchanged

E

ke saath

Δ N

nayi shares issue karne par

E / (N + Δ N) <

old EPS.

Extra shares issue karne ka dilution factor kya hai?

EPS_{n e w} / EPS_{o l d} = N / (N + Δ N)

Agar ek promoter apne 2 lakh shares bechta hai, toh company ke cash ka kya hota hai?

Company ko kuch nahi milta — promoter (seller) ko cash milta hai.

India mein follow-on sale ka ek regulatory reason kya hai?

SEBI ki minimum 25% public shareholding requirement meet karna promoter shares bechkar.

Connections

Understand IPO (Initial Public Offer)
Primary vs Secondary Market
Offer for Sale (OFS)
Earnings Per Share (EPS)
Share Dilution
SEBI Minimum Public Shareholding Norms
Price Discovery in Markets