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. |
