Frequent question: How does FPO work in stock market?

A follow-on public offering (FPO) is the issuance of shares to investors by a company listed on a stock exchange. A follow-on offering is an issuance of additional shares made by a company after an initial public offering (IPO). Follow-on offerings are also known as secondary offerings.

How FPO price is calculated?

In a bid to draw in investors for its follow-on public offer (FPO), YES Bank has set the price band at Rs 12-13 per share — half the current market price of the stock. … Given that the existing number of outstanding shares in the bank is around Rs 1,255 crore, the FPO would imply a 50 per cent dilution in existing base.

How does FPO affect share price?

The process of FPO impacts share prices in the market. Most of the time, FPO pushes the stock price lower because of the dilution. This means that the proportionate decrease in the central value of each stock.

Does FPO come under primary market?

The primary market may also be called the New Issue Market (NIM). In the primary market, securities are directly issued by companies to investors. Securities are issued either by an Initial Public Offer (IPO) … Similarly, an FPO is a process by which already listed companies offer fresh equity in the company.

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Is FPO good or bad?

We could of course be horribly wrong. The arbitrage, and even short term trading metrics, are not in favour. You can’t easily go short, but this stock is likely to be extremely volatile on the downside after the FPO allocations are done.

Does FPO reduce share price?

Dilutive FPO: In dilutive FPO, the company issues an additional number of shares in the market for the public to buy however the value of the company remains the same. This reduces the price of shares and automatically reduces the earnings per share also.

When can we sell FPO shares?

You can sell all the share on one single day on the same day of listing. , Long Term Investing Preferred. Good Day, Yes , FPO of yes bank will have no lock in period.

What happens to FPO?

What happens in an FPO? The issue price for an FPO is mostly lower than the prevailing market price. This is done by the company to get more and more subscribers to its issue. Lower demand for the listed shares eventually brings down the market price and levels it with the FPO issue price.

What happens if FPO is not fully subscribed?

In the event of this not happening, the company refunds the entire subscription amount it received. There is no loss to the investors as the money they invested will be returned to them. The issuing company will not receive any money though.

Who can apply in FPO?

An FPO is essentially a stock issue of supplementary shares made by a company that is already publicly listed and has gone through the IPO process. FPOs are popular methods for companies to raise additional equity capital in the capital markets through a stock issue. The application process is similar to that of IPOs.

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How do I participate in a FPO?

Market participants like mutual funds, individuals, FIIs, qualified institutional buyers and insurance companies can bid for an FPO. On the other hand, promoters can only participate as sellers in the process. There are differences between an FPO and an OFS.

What is difference between FPO and IPO?

IPO is the first public issue of the shares of a private company that is going public whereas FPO is the second or subsequent public issue of the shares of an already listed public company. … On the other hand in FPO, the investors are aware as the company is already listed on stock exchange.

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