Follow-on Public Offer / Farmer Producer Organisation

FPO Full Form in English, letter by letter

FPO is a Follow-on Public Offer, a listed company's later share sale to the public. In agriculture, FPO means Farmer Producer Organisation.

FPO Full Form in Indian Languages

Business pages and farm schemes both use one abbreviation, and FPO stands for Follow-on Public Offer in the stock market, with its name shown below in six Indian languages.

How an FPO differs from an IPO

FPO full form is Follow-on Public Offer, also called a Further Public Offer in SEBI's rules. It is a public sale of shares by a company that is already listed on the BSE or NSE.

An IPO is the first sale of shares to the public. An FPO is any public offer made afterwards. The steps look similar: an offer document, a price or price band, a bidding window of a few working days, allotment and listing of the new shares.

An FPO can take two forms. In a fresh issue, the company issues new shares and receives the money. In an offer for sale, existing holders such as promoters or investors sell their shares and the money goes to them, not to the company. Many offers combine both.

Pricing, categories and how to apply

The price may be fixed or set through book building, in which investors bid within a price band and the final price is decided from the demand. Because the company is already listed, an FPO is often priced at a discount to the market price to draw buyers.

SEBI's rules reserve portions of the offer for categories of investors. In a typical book-built offer by a profitable company, up to half goes to qualified institutional buyers, at least 15 per cent to non-institutional investors and at least 35 per cent to retail investors. The split can differ, so the offer document is the guide.

An individual applies through a demat account, using the broker's app and a UPI mandate or a bank account block, and chooses a price within the band. If the offer is oversubscribed in the retail category, allotment is proportionate or by lottery, so you may get fewer shares than you applied for. Unused money is released.

FPOs that made news in India

Yes Bank's FPO in July 2020, of about ₹15,000 crore, was part of the bank's rescue and capital raising. Vodafone Idea's FPO in April 2024, of about ₹18,000 crore, was one of the largest in India and was meant to fund network spending and reduce debt.

Adani Enterprises' FPO of about ₹20,000 crore opened in January 2023 and was fully subscribed, but the company withdrew it in early February 2023 after a sharp fall in its share price following the Hindenburg report, and returned the money to investors. The episode showed that an FPO can be called off after bidding if the company decides conditions have changed.

State-owned companies such as Power Grid have also used FPOs, and the government has sold part of its holdings in public sector firms through offers for sale.

Why companies raise money through an FPO

Companies use FPOs to repay debt, fund expansion or strengthen the balance sheet. Some also use an offer to meet the minimum public shareholding requirement.

For existing shareholders, a fresh issue means dilution. There are more shares, so earnings per share can fall unless the new money earns a good return. A discounted FPO can also pull the market price down around the issue.

For a new buyer, the pull is a known business at a discount. Check four things in the offer document before you apply: the objects of the issue, the discount to the current price, the promoters' holding after the offer and how institutions subscribed.

FPO compared with a rights issue and an OFS

A rights issue is open only to existing shareholders, in proportion to what they already hold, and is usually priced at a discount. An FPO is open to everyone who applies.

An offer for sale through the stock exchange, called an OFS, is a quick way for promoters, including the government, to sell shares using the exchange's bidding window. No new capital reaches the company in an OFS.

All of these are regulated by SEBI, and the disclosures in the offer document are the best place to learn the terms.

FPO as Farmer Producer Organisation

In agriculture, FPO means Farmer Producer Organisation, a group of farmers registered as a company or cooperative that buys inputs, sells produce and negotiates prices together. The Government of India launched a scheme in 2020 to form and promote 10,000 such organisations.

An older use of the abbreviation is the Fruit Products Order, a food regulation that was later replaced. If an article is about farmers or marketing of produce, it is almost certainly about the Farmer Producer Organisation.

Before applying to any FPO, read the offer document to see whether it is a fresh issue or a sale by existing holders. That one point shows where your money goes.

FPO Full Form: Common Questions