Secondary offering
A secondary offering is a sale of shares that already exist, typically by a large existing such as a founder, an early investor, or a , rather than a sale of new shares created by the company. The proceeds from a secondary offering go to the selling , not to the company itself, so no new capital is raised for the business.
Because no new shares are created, a secondary offering does not dilute other the way a does, though it does increase the number of shares actively trading in the market, which can improve and, over time, help the qualify for broader index inclusion. Secondary offerings are a common way for early investors and sponsors to sell down a large stake after a company has been public for a while, once any has expired.
The market's reaction to a secondary offering is usually milder than to a , since it does not change the company's or capital position, though a very large secondary sale can still put temporary pressure on the simply from the added supply hitting the market, and it can sometimes raise questions about why a major insider is choosing to sell now.