Think of a company like a growing family in a small apartment. When they first decide to move into a big house and invite the public to see it, that's their Grand Opening or IPO. But after living there for a few years, they realize they want to build an extra floor or buy the neighboring plot to expand. To get the money for this new project, they invite the public again to buy more parts of their house. This second invitation the sequel to the IPOis what we call a Follow-on Public Offer (FPO).

In the Indian share market, an FPO is a way for a company that is already listed on the stock exchange (like NSE or BSE) to raise more money. Since the company is already famous and has a track record you can check on your phone, an FPO is often seen as a less mysterious investment than an IPO. In 2026, many Indian giants will use FPOs to reduce their old bank debts or to fund massive green-energy projects. If you already like a company, an FPO is often your chance to buy more of its shares, sometimes at a sweet discount.

What exactly is a Follow-on Public Offer (FPO)?

An FPO is a process by which a company, which has already gone public through an IPO, issues additional shares to the public or existing shareholders.

While an IPO makes a company Public, an FPO helps a Public Company grow bigger. Because the company is already trading, SEBI (the market regulator) allows a much faster and simpler process for FPOs compared to the long-drawn IPO cycle.

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The Two Main Types of FPOs

Not all FPOs are created equal. Depending on whether new shares are being born or old shares are just being handed over, FPOs are divided into two types:

1. Dilutive FPO (Fresh Issue)

The company’s board decides to print and issue brand new shares.

The Goal: To raise fresh cash for the company (to pay debt or expand).
The Impact: Since the total number of shares in the market increases, the value of each existing share gets a bit diluted. It's like cutting a pizza into 12 slices instead of the pizza being the same size, but each slice is now smaller.

2. Non-Dilutive FPO (Offer for Sale)

No new shares are created here. Instead, the Big Bosses (Promoters or early Directors) decide to sell a part of their own personal holdings to the public.

The Goal: To give the founders an exit or to meet SEBI's rule of having at least 25% public shareholding.
The Impact: The total number of shares stays the same, so your slice of the pizza doesn't get smaller.

Why do companies launch FPOs in 2026?

In the current Indian economy, companies usually bring an FPO for these specific reasons:

Debt Repayment: High-interest loans can eat up profits. Companies use FPO money to clear these loans and become Debt-Free.
Expansion: Building a new factory in Gujarat or a tech hub in Bengaluru requires massive capital.
Regulatory Compliance: SEBI rules require every listed company to have at least 25% of its shares held by the public. If a promoter owns 90%, they must bring an FPO to sell that extra 15% to you.
M&A (Mergers & Acquisitions): To buy out a smaller competitor using cash rather than taking a bank loan.

2026 Rules & Comparison: IPO vs. FPO

Under the latest 2026 SEBI guidelines, the process for FPOs has been further streamlined to support Ease of Doing Business.

Feature

IPO (Initial Offer)

FPO (Follow-on Offer)

Company Status

Unlisted (Private)

Already Listed (Public)

Risk Factor

Higher (Unknown market reaction)

Lower (Price history available)

Pricing

Usually a Price Band

Often a Discount to Market Price

Information

Only from the Prospectus

Full history of Quarterly Results

Listing Time

T + 3 Days (2026 Rule)

Frequently Asked Questions (FAQs)

Why is FPO pricing usually lower than the current market price?

To attract you! Since you can already buy the shares from the market, the company offers a 3% to 5% discount so that you choose the FPO route instead.

Is an FPO safer than an IPO?

Generally, yes. You have 3–5 years of profit-and-loss statements and stock charts to study before putting in your money. In an IPO, you only have the company's promises.

Can I apply for an FPO through UPI?

Absolutely. Just like an IPO, you can use any UPI app (GPay, PhonePe, BHIM) to block the amount via the ASBA process.

What is a Floor Price in an FPO?

It is the minimum price at which you can bid for the shares. Usually, there is a Cap Price (maximum) as well.

Does an FPO always lead to a fall in stock price?

Sometimes. In a Dilutive FPO, the market might react slightly negatively because the Earnings Per Share (EPS) will drop. However, if the money is used to clear high debt, the price might actually go up!

Who are Anchor Investors in an FPO?

These are big institutions like LIC or Mutual Funds that buy shares worth crores a day before the public FPO opens. Their participation gives retail investors confidence.

Can I cancel my FPO application?

Yes, you can modify or delete your bid any time before the final day's bidding window closes (usually 5:00 PM on the last day).

What is the minimum lot size for an FPO?

Just like an IPO, SEBI ensures the minimum application value is around ₹14,000 to ₹15,000 for retail investors.

Do I get a Retail Discount in FPOs?

Often, yes. Many Indian companies offer an additional ₹5 to ₹10 discount per share specifically for small retail investors (those applying for less than ₹2 Lakhs).

How long does it take for FPO shares to show in my Demat?

Following the 2026 T+3 rule, the shares are usually allotted and credited to your Demat account within 2 working days after the FPO closes.

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