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TYPES OF FPOs

TYPES OF FPOs

There are mainly two types of FPOs:

1.Dilutive FPOs

2.Non-Dilutive FPOs

 

Dilutive FPOs:  In the case of dilutive FPOs the company issues additional shares to the public or raise additional funds from the public market. Here the company directors agree to increase the numbers of the shares available or the share float. In this case the number of the shares increases but the value of the company remains the same. The purpose of this type of FPO is to pay off debts and expand the business.

 

Non-Dilutive FPO:

A non-dilutive follow-on offering (FPO) occurs when company's promoter, the board of directors, or larger shareholders sell off privately held shares. This type of FPO is called non-dilutive FPO, as no additional shares of the company are issued. Since new shares are not being issued, the company's earnings per share (EPS) and capital structure remain unchanged

 

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