The Complete IPO Guide for Indian Investors · Chapter 3 of 15
Types of IPOs in India
Fresh issue and offer for sale
A fresh issue creates new shares and the company receives the money. An offer for sale (OFS) lets existing shareholders sell some of their shares; the company receives nothing. Most issues combine both.
Why it matters: in a fresh issue your money funds growth; in an OFS it mostly funds an exit by earlier investors or promoters. A large OFS is not automatically bad, since some early investors have held for a decade and want a return, but a high OFS share with weak growth plans deserves a second look.
Book building and fixed price
In a book-built issue the company announces a price band, bids are collected within it, and the final issue price is fixed after the book closes. In a fixed-price issue one price is announced in advance. Nearly all large issues use book building because it lets demand set the price.
Mainboard and SME
Mainboard issues are listed on the main platforms of NSE and BSE and follow the full set of rules. SME issues are for smaller companies, list on dedicated platforms (NSE Emerge and BSE SME) and have different lot sizes, market makers and risks. The second book in this library is devoted to them.
Follow-on and other public offers
A follow-on public offer (FPO) is a further issue by a company that is already listed. Rights issues offer new shares to existing shareholders in proportion to their holdings. REITs and InvITs raise money from the public for property or infrastructure assets and are structured as units of a trust, not shares of a company.
Reading the issue type in practice
When you open any prospectus, the first page of the summary tells you the type: how much is fresh, how much is OFS, what portion is reserved for each category and what the price band is. Make it a habit to write down these four numbers before you form an opinion.
Key takeaways
- Fresh issue funds the company; OFS funds the sellers.
- Book building lets demand set the price within a band.
- SME IPOs have a different lot size, market-maker and risk profile from mainboard issues.
- REITs and InvITs are trust units, not company shares.