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What is Offer for Sale (OFS)?

A mechanism where existing promoters or early investors sell their existing shares to the public during an IPO, rather than the company issuing new shares.

An Offer for Sale (OFS) occurs when existing shareholders (such as promoters, founders, or venture capital funds) sell their existing shares to the public during an IPO.

Fresh Issue vs. OFS

  • Fresh Issue: The company issues brand new shares. The money raised goes directly into the company's bank account to be used for growth, paying off debt, or working capital.
  • Offer for Sale (OFS): No new shares are created. The money raised goes directly into the pockets of the selling shareholders, not the company.

Is an OFS bad?

Not necessarily. It is completely normal for early venture capital investors to seek an exit via an OFS after backing a company for 5-10 years. However, if the promoters (founders) are selling a massive percentage of their stake via OFS, it can be a red flag indicating they are trying to cash out aggressively.