What are the differences between IPO vs DPO |
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 Published On Dec 9, 2019

What are the differences between IPO and DPO?

A typical IPO involves a massive creation of new shares to be sold to the investors. The cash paid by the investors would be injected into the company. The company would usually earmark the IPO proceeds for growth projects.

But a DPO on the other hand do not issue new shares but allow existing shareholders to sell their shares to the public. This means that the shares and cash would exchange hands directly between the buyers and sellers. The company wouldn't get a single cent from these transactions. Therefore, a DPO is NOT a fund raising event.

For this to work, DPO must allow the existing shareholders, including the insiders, to sell their shares. This is opposite to an IPO whereby insiders have to observe a moratorium period and are barred to sell their shares.
The advantage of the DPO over IPO in this aspect is that the prices are more transparent as it is determined by the market rather than the fixed underwritten IPO price.

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