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Initial public offering (IPO)

Initial public offering (IPO) or stock market launch is the process by which a company can go public by sale of its stocks or equities to the institutional investors and usually also retail or individual investors. 

It could be a start-up, young company or an old company that decides to be listed on an exchange and hence goes public.

A New Fund Offer (NFO)

A New Fund Offer (NFO) is similar to an IPO, except, in this case, it is an Asset Management Company (AMC) that launches a new scheme to raise capital.

AMCs use this money to buy securities like equity and bond. These companies mostly launch new mutual fund schemes during a new fund offer (NFO).

AMCs offer NFOs for a specific period only and investors can opt for them at a specific stipulated price, known as offer price, during this period.

In this period, the investors may purchase units of the mutual fund scheme to subscribe to the NFO at an offer price. This is usually fixed at Rs. 10. Once this tenure expires, the investors would be able to purchase the units of the fund at the offer prevailing at the time. Usually, NFO subscribers have found to experience significant gains after listing.

Once the NFO period is over, investors can get these funds at the prevailing net asset value of the fund.