Understanding Shares and Public Offerings
What is a Share?
A share signifies a slice of ownership in a business. By purchasing a share, you essentially own a fraction of that business.
Stock Market Basics
The stock market is the arena where shares are traded.
Initial Public Offering (IPO)
An Initial Public Offering, or IPO, is when a business first makes its shares available to the public. This process enables the company to raise funds by selling shares, often with the assistance of investment banks. After the IPO, these shares can be bought and sold in the open market. The company that issues the shares is referred to as the issuer.
Follow-on Public Offering (FPO)
A Follow-on Public Offering (FPO) takes place when a business that is already listed on the stock market issues additional shares to gather more capital. While an IPO marks the first time a company offers its shares, an FPO involves offering more shares. There are two main types of FPOs:
Dilutive FPO: This involves issuing new shares, thus increasing the total number of shares available.
Non-dilutive FPO: In this case, existing shareholders sell their private shares to the public without changing the total number of shares.
Understanding these terms and processes is crucial for grasping how companies fund their operations and how shares are exchanged in financial markets.