OFS vs Fresh Issue IPOs: Understanding the Two Sides of a Public Listing

“An IPO is that rare party where the hosts sell the snacks and the guests still cheer.” — Rakesh Jhunjhunwala, one of India’s celebrated investors and the ‘Big Bull’ of Dalal Street

Using the Lenskart IPO as an example, this post explains in simple terms the difference between Offer for Sale (OFS) and Fresh Issue IPOs, and how each affects investors and the company.
Markets & Investing
Author

Satvik Raman

Published

November 1, 2025

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Introduction

When a company decides to go public, the buzz is hard to miss. Financial news, social media, and investment apps light up with the term IPO — Initial Public Offering. But not all IPOs are the same. Behind the scenes, two different things might be happening: an Offer for Sale (OFS) or a Fresh Issue. Both involve selling shares to the public, but the money goes to very different places.

Lenskart’s much-awaited IPO offers a perfect example to understand this. The eyewear brand, made famous by its energetic founder Peyush Bansal and its catchy ads, is preparing to list its shares soon. But what exactly is Lenskart offering investors — a Fresh Issue, an OFS, or both? And why should that matter to someone like you?

The Numbers Behind the IPO

Before diving into the details, it helps to understand the flow of money in an IPO. The type of shares being sold — whether freshly issued or already owned — determines who benefits from your investment. This distinction forms the foundation of how an IPO impacts both the company and its shareholders.

What Happens in a Fresh Issue IPO?

A Fresh Issue means the company is creating new shares and selling them to the public for the first time. The money raised goes directly to the company. Think of it like a bakery selling more cakes to raise funds to buy a new oven. The old shareholders still own their shares, but now there are more total shares in existence.

Using the real Lenskart numbers makes this clearer. Before the IPO, the company has 1,68,10,15,590 shares outstanding. It plans to issue 5,34,82,587 new shares through the Fresh Issue, raising around ₹2,150 crore. These new shares increase the total share count and bring fresh money into the business, which can be used to expand its presence, open new stores, or improve its technology stack.

The catch is — after this issue, the ownership of existing shareholders gets slightly diluted. Their slice of the company becomes a bit smaller because the total pie has grown. However, the good news is that the company’s financial capacity increases, ideally leading to faster growth.

What Happens in an Offer for Sale (OFS)?

An Offer for Sale (OFS), on the other hand, works differently. Here, existing shareholders — such as early investors, promoters, or venture capital firms — sell part of their existing holdings to the public. No new shares are created. The money raised doesn’t go to the company; it goes to those shareholders.

Imagine one of Lenskart’s early backers who invested years ago now wants to book profits. They can sell some of their existing shares through the OFS portion of the IPO. For example, Lenskart’s early investors plan to sell 12,75,62,573 shares, worth about ₹5,128 crore. The company’s bank balance remains unchanged — only the ownership structure shifts as new investors replace the old ones.

OFS is a healthy part of the capital market. It provides liquidity to early investors and makes room for new shareholders who believe in the company’s next phase of growth.

The Lenskart Example

Lenskart’s IPO combines both elements — a Fresh Issue and an Offer for Sale (OFS). The total issue size is 18,10,45,160 shares, aggregating up to ₹7,278.02 crore. Of this, about ₹2,150 crore comes from the Fresh Issue (going to the company), and ₹5,128.02 crore comes from the OFS (going to selling shareholders).

This mixed structure is common. The Fresh Issue shows that the company wants to raise funds for expansion — perhaps to strengthen its presence in international markets. The OFS allows existing investors to partially cash out after years of backing the business. Neither is good nor bad — they just serve different purposes.

A Bit of Math to Visualize It

Let’s break this down with the actual IPO data.

Before the IPO - Shares outstanding (pre-issue): 1,68,10,15,590

During the IPO - Fresh Issue (new shares created): 5,34,82,587 shares (aggregating up to ₹2,150.00 Cr) - Offer for Sale (existing shares sold): 12,75,62,573 shares (aggregating up to ₹5,128.02 Cr) - Total Issue Size: 18,10,45,160 shares (aggregating up to ₹7,278.02 Cr)

After the IPO - Total shares outstanding = pre-issue + fresh issue = 1,73,44,98,177

Notice that the OFS shares are not added to the total because they already existed — they simply changed hands. The fresh issue shares, however, increase the company’s total outstanding shares, bringing in new capital.

For investors, both types of shares trade identically after listing. The distinction only matters in understanding where your money goes — whether it fuels the company’s growth (Fresh Issue) or compensates earlier shareholders (OFS).

Final Thoughts

When a company like Lenskart announces its IPO, it’s easy to get caught up in the excitement. But before applying, take a moment to check the composition of the offer — how much is a Fresh Issue and how much is an OFS. That one piece of information reveals where your money is actually going. Understanding this split helps you interpret an IPO more intelligently.

If most of the issue is a Fresh Issue, it signals that the company is raising capital to expand, reduce debt, or invest in research — often a positive sign. If it’s mostly an OFS, it indicates that existing investors are selling, and the company itself won’t directly benefit from the funds raised.

In Lenskart’s case, the number of shares on offer (OFS) is more than twice the number of shares being issued “fresh.” This isn’t unusual. Essentially, some of the early investors intend to partially cash out their stake while simultaneously raising fresh funds for the business’s next stage of growth.