Follow-on public offering: Easy explanation

This video will teach FPO, their types, and why companies have FPOs.
#ipo #fpo #wallstreetmojo #shares #stocks

Chapters:
00:00 – Introduction
00:40 – What is an FPO?
01:24 – Examples of FPOs
01:54 – Types of FPOs
01:59 – Dilutive FPO
02:26 – Non-Dilutive FPO
02:48 – Reasons for FPO
03:00 – Reason for FPO: To clear debt
03:31 – Reason for FPO: To reduce control of debtors
03:54 – Reason for FPO: To raise more capital
04:12 – Conclusion

(Explained in detail in the video)
When a company wants to go public and raise capital from the general public, it has an IPO.

But, if the company wants to raise more capital after the IPO, it would have an FPO.
(Explained in detail in the video)
FPO stands for Follow-On Public Offering.

IPO and FPO both happen in the primary market while the stock market makes the secondary market.

(Explained in detail in the video)

Examples of some FPOs
In 2018, PolarityTE, which has the ticker COOL on Nasdaq, issued an FPO for about $55 million of equity shares.

In 2019, a Chinese company, Huya, completed an FPO of $343 million.
(Explained in detail in the video)
Types of FPOs
There are mainly two types of FPOs based on what kind of shares the company offers, Dilutive FPO and Non-Dilutive FPO.

If a company brings in new shares and offers them in the FPO, it is a "Dilutive FPO."

On the other hand, if the company is offering already existing shares in the FPO, it is a "Non-Dilutive FPO."

(Explained in detail in the video)

Reasons for FPO
A company would do that for a couple of reasons.
To Clear Debt
It is very common for companies to take debt to grow, but sometimes the debt may become a burden for them.

Hence, companies may raise capital through FPO to pay their debt and reduce liabilities.
(Explained in detail in the video)
To Reduce Control of Debtors
When a company takes debt, the debtors may restrict the company and limit their risk-taking activities.

Hence, companies raise capital through FPO, pay back the debt, and regain control over the company's affairs to reduce the debtor's control.
(Explained in detail in the video)
To Raise More Capital
Companies raise capital through IPOs for future expansions and business plans.

At times, the capital raised in the IPO may not be enough for them, and they need to have an FPO to raise more capital.

So, this was all about "Follow-On Public Offering," and we hope you liked the video. We come up with such videos regularly. If you don't want to miss out on those, subscribe to the channel.
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