Primary Capital Market


 
 
Concept Explanation
 

Primary Capital Market

Types Of Public Issues:

Initial Public Offering - IPO

When an unlisted company in order to raise the capital, invites the purchase applications from the public for its new equity shares through an offer, the offer is known as Initial Public Offering. Any company can bring IPO only once.

Follow On Public Offering - FPO

When a listed company in order to raise the capital, invites the purchase applications from the public for its new equity shares through an offer, the offer is known as Follow - on Public Offer. In other word any company issuing its new shares to the public other than the first time.

Rights Issue

Here, a listed organization proposes to issue fresh securities to its existing shareholders as on a record date. The rights are offered in a particular ratio to the number of securities held prior to the issue. This route is best suited for organizations who would like to raise capital without diluting the stake of its existing shareholders. In other word the existing shareholders are offered right of first denial. These shares can be sold to others only when existing shareholders don't purchase these shares.

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