What is FPO & IPO: These days the FPO of Adani Enterprises Limited is in a lot of discussion. Let us know why companies bring FPO and IPO and how they benefit from it.
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FPO & IPO: Country’s famous industrialist Gautam Adani (Adani) The Follow on Public Offer (FPO) of Adani Enterprises Limited, headed by Adani, is in discussion these days. The reason is the recent report of Hindenburg Research, which has raised questions about the functioning of Adani Group. This FPO of Adani Group opened on 27 January and will close on 31 January 2023.
The group has set a target of raising Rs 20,000 crore from this FPO. If this amount is raised, then the group will fund its capital expenditure. The company will spend it on some projects of green hydrogen eco system, improvement of airport system and construction of green field expressway etc. It is also proposed to repay some loan from this amount. Through this report, let us know what is FPO? how does it work? What is the difference between IPO and FPO?
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What is Initial Public Offering (IPO)?
When a company wants to raise money from the stock market for the first time, it applies to SEBI with its complete plan. IPO can be launched only after getting approval. Any IPO opens and closes for a fixed time. This time can usually be for three to five days. Mostly this process is completed in three working days only. If a company has set a target of raising Rs 10,000 crore and applications for Rs 20,000 crore have come, then it is considered good. If at least nine thousand crores against 10 thousand crores means that 90 percent amount does not come from the investors, then the IPO will be canceled and the money of the investors will go back to their account. IPO brings more companies.
What is Follow on Public Offer (FPO)?
Whenever a company listed on the stock exchange raises funds by issuing new shares to investors, it is simply called FPO. For this, the company has to take permission from SEBI. Any FPO can open for a fixed day. At the same time any person or company can apply for FPO. According to the rule of the Government of India, it will be considered successful only when 90 percent of the total target is collected from the market. If the amount is less than this, then the FPO will be considered a failure and the investors’ money will be returned to them.
Ruchi Soya’s FPO came in 2022, which was subscribed 3.60 times. In 2020 Yes Bank FPO was subscribed 93 percent. FPOs usually come in small numbers.
Some Over Subscribed IPO in recent years
- SBI Cards – 26.54 times
- LIC – 2.95 times
- CAMS- 46.99 times
- Zomato – 38.25 times
- Vedanta Fashion (Manyavar) – 2.57 times
- Mrs. Vectors Food – 198.02 times
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