What is FPO in Share Market? Vodaphone Idea FPO on 18 April 2024

What is FPO in Share Market - Hardeep Narula

Imagine two brothers, Anant and Akash, who love cricket and want to create their team for the Indian Premier League (IPL), just like the great – Mumbai Indians.

They finally started their team, “Mumbai Rebels” and invited a set of people to invest in it through an IPO (Initial Player Offering), just like buying shares in a company.

So the exchange of shares of “Mumbai Rebels” helps them to get the initial capital to build a strong team.

With the funds from the IPO, they buy great players like Rohit Sharma, Hardik Pandya, etc. and their team becomes popular, winning many matches in a spree.

As time goes on, they realize that they need more money to keep improving their team and buy VIRAT KOHLI in the auction this time.

So instead of borrowing money from the banks, they offer more shares to the public through an FPO (Follow-on Player Offering), giving people another chance to invest.

With the extra money from the FPO, they buy KOHLI and also find new talent, upgrade their training facilities, etc.

Investors who buy shares during the FPO are happy to see their team slaying it and performing the best than any other teams in the IPL.

So to conclude, just like Mumbai Rebels, businesses in the stock market use IPOs (Initial Public Offering) and FPOs (Follow-On Public Offering) to grow and become more successful.

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What is FPO in the Share Market? IPO vs FPO

What is FPO in Stock Market - Hardeep Narula

Just like IPO “Initial Public Offering” i.e. The initial round of investment raised in the exchange of shares of the company, FPO is the “Follow-On Public Offering”.

FPO in the share market is a secondary round of investment for a company already listed on a stock exchange. 

It is named as follow-on public offering (FPO) as it follows an IPO.

IPO is when a company sells its shares to the public for the first time. While FPO happens after the company is already done with its IPO.

It’s a way for the company to raise additional capital by selling more shares to the public.

The money raised in an FPO can go to the company for the expansion of business, paying off debts, or other purposes.

An FPO benefits existing shareholders a.k.a investors by allowing them to sell their shares at a potentially higher market price. This allows them to make profits and get their exit.

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Example of Vodaphone Idea FPO

Vodaphone Idea FPO 18April - Hardeep Narula

Vodafone Idea plans Rs.18,000 crore FPO on 18th April 2024 which is suffering from debts and losses.

So this FPO will attract more shareholders and investors to invest their money and in return, the company will use this money to settle off debts, to grow and expand, etc.

If the company grows, the share price will grow which will benefit the shareholders with potential profits.

Get ready for the Vodafone Idea FPO subscription starting on April 18 and closing on April 22.

You can grab the shares priced between ₹10 to ₹11 each.

The market experts are buzzing with excitement and are having a 🚀positive/bullish view on this stock looking at the company’s booming potential in the telecom industry.

According to BSE data for the quarter ending in March (Q4FY24), the government holds a 32.19% stake in Vodafone Idea.


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