A fresh issue is a method through which companies can raise new funds by selling more shares to the public as part of an IPO. This method helps a company to grow, repay its debts, and meet its operational needs; however, it decreases the ownership of current shareholders. To learn more about the process, advantages, and functions of fresh issues in IPOs, please continue reading the blog.
What Is a Fresh Issue?
Fresh Issue shares denote the newly created shares of a company that are being offered to the public for the first time, generally as part of an IPO. The shares are directly sold to investors by the company in exchange for money that is needed for business activities like growth or debt repayment. In contrast to existing shareholders’ sales, shares from a fresh issue overview do not represent the company’s equity share count. Funds from a fresh issue go to the company itself, supporting its growth and development.
How It Works in an IPO
During an IPO, a company collaborates with book runners and regulators for the preparation of the public offering by checking its accounting, writing a prospectus, and performing the necessary investigations. The investment banks assist in determining the quantity and cost of the shares, whereas roadshows with company presentations pique the interest of possible investors. After the approval by the authorities has been obtained, the company is listed on an exchange, and public trading is made possible; thus, the enterprise can raise funds directly from the investors.
Difference: Fresh Issue vs OFS
The key differences between a Fresh Issue and an Offer for Sale (OFS) in an IPO are explained below.
| Aspect | Fresh Issue | Offer for Sale (OFS) |
| Meaning | Company issues new shares | Existing shareholders sell their shares |
| Resulting Shares | Increases total number of shares (dilution) | No change in total share count |
| Funds Received | Funds go directly to the company | Funds go to the selling shareholders |
| Equity Dilution | Yes, existing shareholders’ ownership is diluted | No dilution as ownership only transfers |
| Purpose | To raise fresh capital for company growth or debt | To provide exit or partial exit to existing shareholders |
| Impact on Company | Company receives capital for expansion or debt repayment | Company does not receive any proceeds |
Why Companies Opt for Fresh Issues
When firms opt to become publicly traded, the issuance of new shares is almost always the major plan taken to raise necessary funds. The method serves a variety of financial needs that are essential for the business to grow and be stable.
Expansion & Capex
For their extension and capital expenditure projects, the companies raise funds by means of fresh issues. The money is used for buying new equipment, going into new markets, or creating new products, thus allowing for the company’s sustainable growth and strengthening its competitive advantage over the long run.
Debt Reduction & Working Capital
Most of the time, the cash generated from the fresh issue is used to pay off the company’s debt, thereby saving on interest costs and making the company more financially stable. Besides that, the working capital can be increased by obtaining fresh funds, which, in turn, will guarantee the uninterrupted flow of daily operations, improve liquidity, and provide you with the necessary flexibility to efficiently manage your short-term liabilities.
Underwriting & Listing Cost Coverage
A new issue of shares can also make it possible for the substantial costs involved in going public, for example, the fee for the underwriter, legal expenditure, and the stock exchange listing charges, to be met. These charges are essential to following the rules issued by the regulators and completing the IPO process successfully.
Impact on Shareholding & Dilution
When a company launches an IPO with a fresh issue, it introduces new shares into the market, often reducing the percentage ownership of existing shareholders, a process known as dilution. The implications of dilution and the extent of its impact on shareholding depend on the size of the fresh issue relative to the company’s pre-issue equity base.
Example IPO Breakdown
Let’s break down a few IPO cases to see how fresh issues impact companies and their shareholders.
Paytm
Paytm’s IPO included a fresh issue of around ₹8,300 crore, part of the overall ₹18,300 crore offering. This increased the company’s equity base and diluted existing shareholders’ ownership. The raised capital was mainly allocated for expanding the Paytm ecosystem, acquiring customers, investing in technology, and funding partnerships, supporting its growth and service enhancement.
Flysbs Aviation
Flysbs Aviation raised ₹102.53 crore entirely through a fresh issue of approximately 45.57 lakh equity shares. As a result, pre-IPO promoters’ shareholding decreased from 44.08% to 32.47%, reflecting a dilution of around 11.6% points. The proceeds from the IPO are intended for fleet expansion, debt repayment, and operational improvements, enabling Flysbs Aviation to strengthen its presence and capabilities in the private aviation sector.
Financial Perspective for Investors
One of the most remarkable ways through which an investor can broaden his financial horizon is by investing in an IPO. In such an event, the investor gets the chance to be a part of the company’s journey of growth from the very beginning and potentially make a substantial profit as the business expands. On the other hand, IPO investments are accompanied by various obstacles, including dilution of the shareholders’ value and the risk of market volatility. This makes it necessary to weigh the potential long-term benefits of such an investment against the immediate trade-offs.
Long-Term Growth vs Dilution Trade-off
The following highlights the key differences investors should consider when evaluating the long-term growth potential versus the dilution trade-off in an IPO investment.
| Aspect | Long-Term Growth | Dilution Trade-off |
| Benefit | Potential for capital appreciation as the company grows and profits increase | Reduction in ownership percentage due to new shares being issued |
| Risk | Market and business risks can impact future returns | Reduced voting power and earnings per share for existing shareholders |
| Investor Objective | Building wealth over time by backing future growth | Accepting shorter-term ownership dilution for access to growth capital |
| Overall Impact | Growth often outweighs dilution, increasing shareholder value | Immediate dilution accepted as a necessary step for company expansion |
Regulatory & Procedural Considerations
Public offerings in India are mainly governed by the Securities and Exchange Board of India (SEBI), which guarantees a system that is both safe and transparent for companies as well as investors. Before an IPO, corporations are obligated to submit a Red Herring Prospectus (RHP), which should reveal the financial positions, risks, and business prospects of the company for SEBI’s consideration and approval. They must also get clearance from stock exchanges like NSE or BSE.
The procedure is through the hiring of merchant bankers, underwriters and registrars to handle the subscription and allotment. Corporate entities are obliged to meet the criteria of the minimum public shareholding and abide by the disclosure requirements after the listing. The regulations act as a shield for the investors’ rights and facilitate the maintenance of market conduct in an orderly manner.
Real-World Cases & Recent News
To understand the practical application of Fresh Issues in IPOs, let’s look at some recent real-world examples where companies have raised capital to fund their growth and expansion.
NephroPlus IPO Fresh Issue (2025)
NephroPlus filed for a 2025 fresh issue IPO to raise ₹353.4 crore. The company plans to use the funds for the nationwide expansion of dialysis clinics, to repay debt, and for general corporate purposes. NephroPlus, which has over 447 clinics in India and abroad, is the leader in the organised dialysis market in India with a market share of more than 50%. ICICI Securities and Ambit Private Limited are the main merchant bankers who are managing this IPO.
Flysbs Aviation Fully Fresh Issue IPO
In August 2025, Flysbs Aviation went through a fully fresh issue IPO, successfully raising ₹102.53 crore. The company plans to use the money raised through the issue for purchasing new aircraft, repaying debt, and for the smooth running of operations. The raising of this capital is Flysbs Aviation’s decision to expand into the private aviation sector, which is the target.
Swiggy Fresh Issue Expansion
One of the most significant changes to the Swiggy IPO is the freshness of the issue, which contributes ₹5,000 crores and is aimed primarily at the company’s expansion, technology investments, and service enhancement. The company’s decision to raise more capital than initially planned, from ₹3,750 crore to ₹5,000 crore, is reflective of its aspiration to consolidate its position in the market and to grow faster in the Indian food tech sector, which is becoming increasingly competitive.
FAQs
A fresh issue in an IPO is a company issuing shares to the public for the first time in order to raise capital for the business. The money raised is the company’s, and thus, the total shares outstanding will be increased.
New shares are being issued by a company to increase the company’s capital, which, in turn, is going to increase the total share capital and decrease the value of the existing shares. On the other hand, a sale offer (OFS) enables the existing shareholders to sell their shares without the company receiving new funds, and there is no dilution.
One of the reasons why companies go for a new issue is to have enough capital to satisfy their different needs, such as making the business bigger, funding new projects, or simply improving the company’s working capital. The money that is raised gives them the freedom to use funds to take up the strategic opportunities, strengthen their businesses and set themselves up for future growth.
The issuance of new shares results in the shareholders of the company being diluted, i.e., the number of the company’s shares increases and the percentage of shares held by them decreases. Nevertheless, if the company benefits from the new money, this may be a good thing, as it may have more value in the long term and more development possibilities for all shareholders.
Both a fresh issue and an Offer for Sale (OFS) can definitely be components of the same IPO. It means that the company goes on the market to raise new capital through a fresh issue, whereas at the same time, existing shareholders sell off some of their shares via the OFS, making it a combined way of raising funds and transferring shares.
Recently, several companies such as Flysbs Aviation, Belrise Industries, and many other firms have raised money through new offerings in their IPOs. The money raised has been used for the expansion of the company, for the repayment of the debt and for the improvement of the operation.
