An offer for sale, or OFS, is the part of an IPO in which existing shareholders sell some of their shares to the public. The company itself receives no money from this part, because the proceeds go to the shareholders who are selling, who are often promoters, private equity funds or early investors using the IPO to exit or reduce their holding. This is different from a fresh issue, where the company creates new shares and receives the money for its own use, such as paying debt or expanding. Many IPOs combine both. A large OFS component with little fresh issue can mean the IPO mainly benefits early investors rather than the business, so it is worth checking the split in the offer document, where the use of proceeds is described. An OFS also does not change the number of shares outstanding, so it does not dilute existing holders, whereas a fresh issue does. A separate OFS route exists for large listed companies, where promoters sell shares through a special exchange window.
Example: An IPO raises Rs 1,000 crore through Rs 400 crore of fresh issue and Rs 600 crore of OFS. The company receives only the Rs 400 crore; the selling shareholders share the other Rs 600 crore.