What is Secondary Public Offering?

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Secondary public offering refers to the behavior of already listed companies raising funds from the public through public offering. In the secondary public offering, the company raises funds from the public by issuing new shares to meet its capital needs. Secondary public offerings usually involve approval and supervision by securities exchanges to ensure the rights of public investors and the normal operation of the market.

Definition

A secondary public offering refers to the process by which a publicly listed company raises funds from the public through the issuance of new shares. This is done to meet the company's financial needs.

Origin

The concept of secondary public offerings developed alongside the growth of the securities market. The earliest public offerings date back to the 19th-century stock markets when companies began issuing shares to raise capital. As markets matured, secondary public offerings became a crucial method for companies to refinance.

Categories and Features

Secondary public offerings can be categorized into several types, including new share issuance, rights offerings, and convertible bonds. New share issuance is the most common form, where companies issue additional shares to raise capital. Rights offerings provide existing shareholders the right to purchase new shares. Convertible bonds are hybrid securities that can be converted into company stock under certain conditions. Each type has specific application scenarios and pros and cons, such as new share issuance potentially diluting existing shareholders' stakes, while rights offerings require participation from current shareholders.

Case Studies

A typical example is Apple's secondary public offering in 2013, where Apple raised significant funds through new share issuance for research and market expansion. Another example is Tesla's secondary public offering in 2020, where Tesla raised over $5 billion to strengthen its financial position and support future growth plans.

Common Issues

Investors might face issues such as short-term stock price volatility following a new share issuance. Additionally, investors should consider the company's purpose for issuing new shares and its plans for using the funds to assess the impact on the company's long-term value.

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Zero-Rated Goods

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Zero-Floor Limit

The term "zero-floor limit" refers to a policy whereby merchants are required to obtain authorization for every transaction processed at their store, regardless of its size. By contrast, some stores only require authorization for transactions that are above a certain size, with that size threshold being known as the store's floor limit.

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The term "zero-floor limit" refers to a policy whereby merchants are required to obtain authorization for every transaction processed at their store, regardless of its size. By contrast, some stores only require authorization for transactions that are above a certain size, with that size threshold being known as the store's floor limit.

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Lisbon Treaty

The Lisbon Treaty, also known as the Treaty of Lisbon, updated regulations for the European Union, establishing a more centralized leadership and foreign policy, a proper process for countries that wish to leave the Union, and a streamlined process for enacting new policies.The treaty was signed on December 13, 2007, in Lisbon, Portugal, and amended the two previous treaties that established the foundation for the European Union.

Labor Intensive

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Labor Intensive

The term "labor-intensive" refers to a process or industry that requires a large amount of labor to produce its goods or services. The degree of labor intensity is typically measured in proportion to the amount of capital required to produce the goods or services: the higher the proportion of labor costs required, the more labor-intensive the business.

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