CHAPTER - 9
FPO & OFS
FPO
The FPO is Follow on public offer. An FPO aims to raise funds from the public. The company can raise additional capital from the public through FPO even after the listing of the company. The existing shares can be diluted, or fresh shares can be created & offered in an FPO.
In FPO, the merchant banker would be required to draft a Red Herring Prospectus approved by SEBI. After getting a nod from SEBI, the bidding is allowed for 3-5 days. Finally, the cut-off price is declared based on demand & the shares are listed on the stock exchange.
OFS
The promoters can opt to offer their holdings to the whole market. In addition, the exchange provides an avenue to subscribe to OFS through stockbrokers.
Rules & regulations in OFS:
1. The option of OFS is available only to the top 200 companies (the ranking is based on the market capitalization)
2. It is mandatory to reserve at least 25% of shares in an OFS for mutual funds & insurance companies.
3. 10% of the shares to be reserved for retailers.
4. Any stakeholder (non-promoter) with more than 10% of share capital can also sell their stake in OFS.
5. The company has to inform at least two days before the OFS