What are the Differences Between IPO and FPO?

Author : Sarah Jones | Published On : 05 Mar 2026

Initial public offerings (IPOs) offer a lot of opportunities to invest in a company when it offers its shares to the public. However, beginners often confuse IPOs with follow-on public offerings (FPOs), which are different from each other. This blog differentiates IPOs and FPOs based on numerous parameters.

What is an IPO?

An IPO is a procedure by which a privately held company offers its shares to the public for the first time. This allows a company to be listed in the secondary market. Companies raise their capital from the public with the transition from a private to a public company. This entails selling its existing stake and issuing new shares.

There are two types of IPOs. One is the fixed price IPO, and the other is book building process IPO.

Importance of IPO for Investors

1. Access to Inaccessible Companies

Investors can get access to shares of a company that were previously inaccessible to them by using an IPO.

2. Substantial Returns

If you apply IPOs online, you can yield higher returns if it performs well in the future.

What is an FPO?

A follow-on public offer is the issuance of shares after the company is listed on a stock exchange. As the name suggests, an FPO is an additional issue, whereas an IPO is an initial or first issue.

There are also two types of FPO. One is a dilutive FPO, and the other one is a non-dilutive FPO.

Importance of FPO for a Company

1. Price Advantage

Once after launching an FPO, most of the companies offer additional shares at a discount. This discount makes your FPO investments an ideal investment opportunity to purchase shares of a company at a lower rate.

2. Financial Statements

While an IPO provides less information about a company's financials, an FPO offers a lot of financial information. Since the company is already public, investors can evaluate its historical performance and find out whether investing in the shares will yield profits.

Differences Between IPO and FPO

Parameters	IPO	FPO
Price	Fixed or variable price range	Market-driven price depends on the number of shares
Company	Issued by private companies	Issued by publicly-traded companies
Returns	High potential for capital appreciation	Less opportunity for capital appreciation
Share capital	Share capital increases since the company issues fresh capital to the public.	Shares increase in a dilutive FPO and remain the same in a non-dilutive FPO.
Information Availability	Company information is not easily available.	Company information is publicly available.
Value	Expensive	Less expensive since the company's worth is being increasingly diluted.
Underwriting	Involves investment banks' underwriting at all times.	In most cases, underwriting is not engaged.
Risk	Risky	Comparatively less risky
Status of the company	An unlisted company issues an IPO.	An already-listed company issues an FPO.

Final Thoughts

For beginners and independent investors, an FPO is comparatively a safer option. Compared to FPO, investing in an IPO involves more research. You could think about investing in an IPO if you have trust in the firm and have a healthy risk tolerance.

However, risk and rewards are crucial factors in the distinctions between FPO and IPO. Always consult with a financial advisor before investing in an IPO or an FPO.