Differences between OFS and FPO in share market
Aug 26, 2020

Differences between OFS and FPO in share market

OFS (Offer for Sale) is a transparent process through which promoters of listed companies can sell their shares at the exchange to divest their shareholdings. On the other hand listed companies release an FPO (Follow-on Public Offering) to raise additional capital to materialise their expansion plans and pay off a debt. If you are not sure about the different properties of OFS or IPO please read the following first:

Once you have the basic understanding of OFS and IPO, go through the distinguishing features between OFS vs FPO.

Characteristics OFS FPO
Full Form The full form of OFS is “Offer for Sale”. The full form of FPO is “Follow-on Public Offering”.
Objective The OFS is a transparent and convenient channel for promoters of listed companies to sell their stake in the firm. The government also utilise this route to reduce its holdings in public sector undertakings. Listed companies release an FPO to raise additional capital to materialise their expansion plans and pay off debt.
Duration The OFS is a fast process and gets over in a single trading session. Processing of the FPO takes about three to ten days time, as companies need to file papers and obtain necessary approvals from the SEBI.
Pricing In the OFS, the company issues a floor price for the stocks. Investors bidding below the price range will get automatically rejected. In the FPO, firms decide price band for the shares. Traders need to place their bid within the approved range.
Time for Application Investors apply on the day of releasing the OFS. Interested candidates apply for FPO in advance.
Multiple Bids Traders can bid for multiples of shares as they get released in bundles. Investors cannot place an order for multiple bids.
Charges Investors need to pay Securities Transaction Charges (STT) and brokerage fees while buying the OFS. Traders need to pay SEBI filing charges, and fees for managers while purchasing the FPO.
Prospectus Companies do not require to issue a fresh prospectus for issuing OFSs. Firms need to publish a prospectus and also require approvals from SEBI for releasing FPOs.
Payment Payments for OFSs get carried out on the spot. If companies fail to allot shares to investors; then they return it Payments for FPOs goes ahead through ASBA facility. The chares for the shares get processed after their allotment in the name of investors.

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