What is FPO? A Complete Beginner's Guide to FPO in Nepal
FPO is another important term that investors encounter in Nepal's share market. While IPO is generally associated with a company's first public share issue, FPO is used by companies that have already issued shares to the public.
FPO is another important term that investors encounter in Nepal's share market. While IPO is generally associated with a company's first public share issue, FPO is used by companies that have already issued shares to the public.
Understanding the difference between IPO and FPO is important for anyone learning about the Nepalese stock market.
What Does FPO Mean?
FPO stands for Follow-on Public Offering.
It is an additional public offering of shares by a company that has already gone through an IPO and has publicly traded shares.
In simple terms:
IPO = First public share offering
FPO = Additional public share offering by an already public company
Why Do Companies Issue FPOs?
A company may issue an FPO when it needs additional capital.
The money raised can be used for purposes such as:
- Business expansion
- New projects
- Increasing capital
- Repaying liabilities
- Meeting regulatory requirements
- Strengthening the company's financial position
The exact purpose depends on the company and the approved issue structure.
Simple Example
Suppose ABC Company already has shares listed on NEPSE.
After some time, the company needs additional capital to expand its business. It decides to issue additional shares to the public.
Because the company is already publicly listed, the additional public issue is called an FPO rather than an IPO.
Can Anyone Apply for an FPO?
Eligibility depends on the specific FPO issue.
The company and the approved issue documents specify who can apply, the number of shares available and other applicable conditions.
Therefore, investors should always check the official issue notice before applying.
How to Apply for an FPO in Nepal
When an FPO is available for application, eligible investors can generally apply through the Mero Share My ASBA system.
Investors need the necessary Demat, Mero Share and banking arrangements required for ASBA applications.
The process is broadly similar to applying for an IPO.
Is FPO Better Than IPO?
There is no simple answer.
An FPO does not automatically mean that an investment is better or safer than an IPO.
Before investing, investors should consider the company's financial condition, business model, profitability, valuation, purpose of the issue and other relevant information.
Final Thoughts
FPO stands for Follow-on Public Offering and refers to an additional public issue by a company that is already publicly traded.
For beginners, the easiest way to remember it is:
IPO makes a company public for the first time, while FPO allows an existing public company to issue additional shares.
Understanding FPO is an important step toward understanding how companies raise capital through Nepal's share market.
