IPO or Initial Public Offer refers to the first time a Joint Stock Company offer its equity to public. The investors / subscribers of this issue are allowed to participate in the equity capital of the company by receiving number of shares allotted to them through IPO to which they subscribed. The public or institutional investors are free to bid for any number of shares within the price band of the offer, subject to minimum and maximum limits prescribed in the prospectus of the offer which is duly vetted by SEBI. In case the offer is over subscribed usually a pro-rata allotment is made to the investors in consultation with the stock exchanges where the equity will be listed and SEBI. The Balance bid amount is refunded to the investor.
NFO or New Fund Offer on the other hand refers to the offer made to public by a mutual fund house / Asset Management Company of a mutual fund which they can subscribe to. Based on the subscribed amount / number of Units are allotted to the investor. The amount collected is invested as per the objectives and a daily NAV of each specific is published which shows the value per unit of the investment as on a specified
date which may increase / decrease based on value of the portfolio held under that specific fund. The units may then be traded on exchanges or be redeemable by the AMC based on terms of the issue of the NFO for further details please refer to our Mutual Fund section.
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