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What is a secondary market offering?

Secondary market offering

Also called a secondary distribution, it's the sale of a large block of shares that has previously been offered to the public. The shares will generally have been held by institutional investors since an initial public offering.

Where have you heard about secondary market offerings?

Secondary market trading is the most common form of exchange for securities. The London Stock Exchange is a secondary market. The securities are offered to other investors, and all the proceeds of the sale go to the current shareholder rather than the company.

What you need to know about secondary market offerings.

A secondary offering doesn’t dilute the value of the shares for existing shareholders because no new securities are created. However, a particularly large offering might put pressure on the security's price until the additional shares have been fully absorbed in the market.

A secondary market offering is not the same as a seasoned equity offering, whereby new shares are circulated, diluting the value of the existing shares.

Find out more about secondary market offerings.

Read our definition of seasoned equity offering to see how it differs from a secondary offering.

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