Secondary Offering
The sale of new or existing shares by a public company after its IPO.
What is Secondary Offering?
A secondary offering is the sale of shares in a company that is already publicly traded. It can take two forms: a dilutive secondary (the company issues new shares, raising fresh capital and diluting existing shareholders) or a non-dilutive secondary (existing shareholders such as founders or early investors sell their shares, with proceeds going to them rather than the company). Secondary offerings are common when companies need to fund expansion, reduce debt, or provide liquidity for early investors.
Example
After its IPO, a technology company returns to the market six months later to sell 10 million new shares at $25 each, raising $250 million to fund data center expansion. Existing shareholders are diluted as the share count increases.