Secondary Offering

Secondary Offering – A subsequent listing of securities already in issue. This can be new securities for public sale from a company that has already done an IPO. It is known as a Listing by Introduction. In many cases, this type of offering is made by companies looking to refinance or raise capital for growth. This type of listing increases outstanding shares, and spreads a company’s market capitalization (value) over a greater number of shares. It also dilutes the positions of shareholders owning previously issued shares. Another type of secondary listing is the sale of securities owned by major shareholders in a company. They may choose to sell all or a large portion of their holdings. This is known as a Placement. In such cases, the offering is triggered by founders of a business (or the original financiers) wanting to decrease their positions in a company. This kind of offering does not increase the number of outstanding shares. It usually happens gradually to ensure no negative effects on the price of the equity, and it does not dilute the positions of shareholders owning previously issued shares.