IPO. Whenever a company brings its shares to the stock market for the first time to the general public, this process is called IPO i.e. Initial Public Offering. Through this, companies release their stake to the common people, from where this company comes in the stock market.
Similarly, through FPOs, companies bring more of their share to the market for the common people. Through FPO i.e. Follow-on Public Offer, companies already listed in the stock market reduce their stake and issue it to the common people. Through this, the purpose of the company is to raise even more funds.
Whenever a company brings its FPO, it first gives its shareholders a chance to buy new shares. After this, he goes to new investors to buy shares . The company also gives discounts on shares offered under FPO . Due to which old shareholders can buy these shares at a cheaper price.
Investing in an IPO is relatively riskier but they can be more profitable than FPOs as they participate in the initial growth of the company. FPOs are relatively less risky than IPOs since there is more transparency and available information about the company with the investors.
There are some similarities between an IPO and an FPO—in both cases, the company is issuing new shares for the public to purchase—there are some notable differences. The most obvious difference is that while an IPO is when a company goes public for the first time, a company issuing an FPO is already public.