The primary market is where a company raises fresh capital by issuing new securities to investors for the first time; an Initial Public Offering (IPO) is the first sale of shares by a private company to the public.
- In an IPO a company offers shares to the public for the first time and gets listed on a stock exchange; a Follow-on Public Offer (FPO) is a later issue by an already-listed firm.
- IPOs in India usually follow the book-building route, where investors bid within a price band and the cut-off price is discovered from demand.
- The primary market raises new money for the issuer; the secondary market only transfers existing securities between investors, with no fresh capital to the company.
- All public issues are regulated by concept sebi, which vets the offer document (prospectus) for disclosures to protect investors.
- Other primary-market routes include rights issues (to existing shareholders) and private placement / Qualified Institutional Placement (to select institutions).
The primary-versus-secondary market distinction, the meaning of an IPO versus an FPO, and SEBI's role in vetting issues are standard capital-market items.
Primary market (new securities, fresh capital to the issuer) versus secondary market (existing securities traded between investors); an IPO is a first public issue, while an FPO is a later one by a listed company.
Primary market issues new securities to raise fresh capital; an IPO is a company's first public share sale, regulated by SEBI.