Primary Market (New Issue Market)

The primary market, also called the New Issue Market, is the segment of the capital market in which new securities are issued for the first time. When a company raises capital through the primary market, the money flows directly from the investor to the company (or to the government, for government securities) — this is the market's defining feature: it is the only point at which the issuer itself actually receives fresh funds from a security's issue.

Companies use several methods to raise capital in the primary market:

• Public Issue (IPO/FPO). The company invites the general public to subscribe to its securities through a prospectus, a legal document disclosing the company's financials, business, risks and the terms of the issue. When an unlisted company offers shares to the public for the very first time, it is called an Initial Public Offering (IPO); a further public issue by a company already listed on a stock exchange is called a Follow-on Public Offer (FPO). This is the most transparent and widely used route, but also the most expensive and time-consuming, given the disclosure and regulatory compliance it involves.
• Offer for Sale (OFS). Here, it is not the company that offers new shares — instead, existing shareholders (typically promoters or large investors) offer their already-held shares to the public or to institutional investors. The company itself does not receive any fresh capital from an OFS; only the ownership of existing shares changes hands, often used to meet minimum public-shareholding requirements or to let early investors partially exit.
• Private Placement. The company offers its securities directly to a select group of investors — institutional investors, high-net-worth individuals, or a chosen few — rather than to the public at large. It is faster and less costly than a public issue, since it avoids the wider disclosure and marketing effort a public issue needs, but it reaches a much smaller pool of investors and is subject to the private-placement limits laid down under the Companies Act, 2013.
• Rights Issue. The company offers new shares to its existing shareholders, in proportion to their current shareholding, usually at a price below the prevailing market price, as a way of rewarding and protecting the ownership stake of those who already hold shares. An existing shareholder receiving a rights offer may subscribe to the new shares, renounce the right in favour of someone else, or simply let it lapse.
• e-IPO (Online IPO). A public issue made through the electronic, online infrastructure of a recognised stock exchange, using registered brokers as the point of application. It widens the reach of an issue at lower cost and typically works together with the ASBA (Applications Supported by Blocked Amount) mechanism, under which an applicant's money stays blocked in their own bank account — earning interest and never actually leaving the account — until shares are allotted, rather than being transferred out upfront. …