Public Offering

Winter grazing
Winter grazing

Public offering is one way for firms to raise funds by selling securities to the public. In general, securities can be sold as a public issue or as a private issue. Private issue refers to the sale of securities to a few investors which does not require a registration statement with the SEC (or with similar institutions in other countries other than the U.S.).

New issues of securities are sold to the public, with the help of investment banks, in primary markets, while existing-securities are traded in secondary markets.

Public issues can either be “general cash offer” or the “rights offer.” The first one indicates that issues are marketed to all investors, while the latter one indicates that shares are marketed to existing shareholders.

Initial public offering (IPO), or unseasoned new issue, refers to the public issue of a privately held company to the public for the first time. All IPOs are cash offers. When new issues of stocks are marketed to the public for a company with previous public offering, it is called a seasoned new issue.