OFS stands for “Offer for Sale,” and is a process where existing shareholders, often promoters sell their stake in a company to the public to reduce their holdings or raise funds.
Initial Public Offering (IPO) is the first time when a company offers its shares to the public, usually to raise capital by listing on the stock market for expansion or other activities.
In an IPO, new shares are introduced, allowing new investors to join, whereas in an OFS, existing shares are sold by major shareholders, making it a resale rather than new issuance.
IPOs raise capital for the company’s growth, expansion, or debt repayment, while OFS allows existing shareholders to monetize their investment by selling part of their stake.
IPO pricing is determined through book-building with investor bids, whereas OFS is usually priced at a discount to the market price to attract quick buyer interest.
In an IPO, new shares are issued, causing ownership dilution, whereas in an OFS, existing shares are sold, so there is no dilution of existing ownership.
IPOs undergo strict SEBI scrutiny with legal and financial disclosures, whereas OFS follows a simpler process with less regulatory oversight.
IPOs are open to all types of investors for broader participation, whereas OFS is often limited to specific groups, such as institutional investors.
IPOs can alter the company’s debt-to-equity ratio with new equity, whereas OFS only transfers ownership and does not affect the financial structure.
IPOs generally take longer due to detailed requirements, while OFS can be completed more quickly, as it involves fewer formalities.
IPOs may increase market liquidity by introducing fresh shares, whereas OFS may have less impact on liquidity, depending on the sale’s size.