WHAT IS PRIMARY MARKET
Securities like Bonds, Debentures, Stocks are traded or invested under Capital Market. This Capital market is classified into two types, which are, Primary Market & Secondary Market. Primary Market is also known as "New Issue Market", while Secondary Market is known as "After Market"
WHAT IS PRIMARY MARKET
Primary Market is nothing but the market, where new securities are created and its useful for the issuers or owners of the company to increase their capital to run the business. The market which plays as a role of registration of new company is known as Primary Market.
HOW PRIMARY MARKET WORKS
Primary Market is the place where the new securities are generated. Securities like Bonds, Debentures, Equity, Debt are created here. For ex., If one new company say ABC wants to run their business but they dont have sufficient money to run the business means they need to register with SEBI.
Before that company register with SEBI, that company needs to meet a Underwriter. Underwriter is nothing but the finance company or say Banks. That Underwriters help that new company to prepare a prospectus with detailed information about the company to register with SEBI.
After full filing the details with SEBI, that company should be presence among the public, which means investors. Bidding process will start for say one year, in this period, that company will sell their shares, investors mainly brokerages, banks start to apply for the stocks with their rates.
Company gauges the interests of the investors and the price will be set accordingly. After setting of price, securities sold at that rate to the investors, after this period of sale, then it will listed in secondary market, where existing securities will be traded.
TYPES OF ISSUES
There are certain types of issues which is used to raise the capital for the company, the major types are.
IPO - Initial Public Offering
It is the regular type of issue, where the securities are created and it will be sold to the investors, as per the application of investors in bidding process.
Rights Issue
Its one of the type of issue, where the existing share holders will invest in this company, if that company again comes to the primary market for generate the capital.
Private Placement
Its another type of issue, instead of going to the public through IPO, capital will be raised among the high individual investors.
24 сен 2024
