OFS vs Fresh Issue in an IPO: What It Means, Explained With This Week's IPOs
An offer for sale (OFS) in an IPO is when existing shareholders sell their shares to the public, so the money goes to them, not to the company. A fresh issue is when the company creates new shares and keeps the money. The difference matters right now: of the four companies set to announce IPO price bands on Monday, October 12, 2026 — Zetwerk, Tonbo Imaging, Bonfiglioli Transmissions and Sahajanand Medical Technologies — three are entirely OFS, Business Standard reported.
So how do you tell what an IPO's money will actually be used for, and why should it affect your decision? This guide explains it simply.
Key Takeaways
- Fresh issue: new shares; money goes to the company; existing holders are diluted.
- Offer for sale: existing shares; money goes to selling shareholders; no new capital for the company.
- This week, Zetwerk plans a mix of both (about ₹5,000 crore in total), while Tonbo Imaging, Bonfiglioli Transmissions and Sahajanand Medical Technologies are entirely OFS, according to their latest public filings.
- Large OFS-heavy IPOs have shown underperformance after listing amid turbulent markets, Business Standard noted.
What Is the Difference Between OFS and Fresh Issue?
| Feature | Fresh issue | Offer for sale (OFS) |
|---|---|---|
| Who sells the shares? | The company (new shares) | Existing shareholders (promoters, investors) |
| Who gets the money? | The company | The selling shareholders |
| Total shares outstanding | Increase | Stay the same |
| Effect on balance sheet | Adds cash; can cut debt or fund growth | No change |
| Where to check the use of money | "Objects of the Offer" in the RHP | List of selling shareholders in the RHP |
Most IPOs mix the two. The red herring prospectus (RHP), the offer document filed before the issue opens, shows exactly how much is fresh and how much is OFS, and who is selling.
Which IPOs Are OFS This Week?
| Company | Business | Structure (latest public filings) |
|---|---|---|
| Zetwerk Manufacturing | Manufacturing platform | Fresh issue + OFS; about ₹5,000 crore in total |
| Tonbo Imaging | Defence electronics | 100% OFS (up to 1,80,85,246 shares in draft) |
| Bonfiglioli Transmissions | Industrial gearboxes and drives | 100% OFS |
| Sahajanand Medical Technologies | Medical devices | 100% OFS |
Source: Business Standard, October 11, 2026. Price bands were due to be announced on October 12; issue sizes for the OFS-only IPOs depend on the final price.
For Zetwerk, Bloomberg reported a fresh issue of about ₹2,600 crore plus an OFS of up to 9.684 crore shares, which would make the fresh component roughly half the issue. Read our full guides on the Zetwerk IPO and the Tonbo Imaging IPO.
Is an OFS Bad for Investors?
Not automatically. An OFS often happens because early investors, such as venture capital or private equity funds, need to return money to their own investors after several years. That's a normal part of the funding cycle.
But an OFS does change what you should focus on:
- No growth capital. The company won't receive money to expand or cut debt, so its future growth must be funded from its own cash flows or borrowing.
- Seller incentives. Sellers want the highest possible price. With no money going to the company, valuation becomes the main thing to judge.
- Who is selling, and how much do they keep? Promoters selling a small slice is different from an investor exiting completely.
GoPocket Analysis: Why the OFS Question Matters More in 2026
IPO pricing has already become tougher. The median price-to-book ratio for Indian IPOs raising at least ₹1,000 crore fell to 7.4 times in 2026 from 10.2 times in 2025, according to a Bloomberg report carried by Business Standard. That's a fall of about 27%, which suggests institutional investors have been pushing back on high asking prices.
Add a weak secondary market and a cluster of issues in one week, and investors have more choice and less urgency. In that setting, an OFS-only IPO has to stand on its business quality and price alone, because there's no "use of proceeds" story to support it.
A Simple Checklist Before Applying to Any IPO
- Find the fresh issue vs OFS split in the RHP.
- Read the "Objects of the Offer" section for how fresh money will be used.
- Check the list of selling shareholders and their post-IPO holding.
- Compare the valuation with the latest year's profit, not an older, higher one.
- Read the risk factors, especially customer concentration and pending litigation.
What to Watch This Week
- Price bands and lot sizes for the four IPOs, due October 12.
- Anchor investor allocations, a day before each issue opens.
- Day-wise subscription data, especially in the qualified institutional buyer (QIB) category.
Track all open and upcoming issues on the GoPocket IPO page.
Sources
- Business Standard, Street signs: IPO activity set to regain momentum, new MF schemes slow, October 11, 2026
- Business Standard (Bloomberg), India's domestic funds push IPO valuations lower amid market strain, October 1, 2026
- Bloomberg, Zetwerk Is Said to Plan Up to $525 Million India IPO Next Week, October 9, 2026
Disclaimer: This article is for information and educational purposes only. IPO details are based on public filings and media reports and may change. This is not a recommendation to apply for, buy or sell any security. Consult a SEBI-registered investment adviser before investing.
