primary market of securities

IPO - this is the market on which the Issuer produces and sells newly issued securities. The sale of securities is carried out by subscription or directly to the primary buyers.
IPO - initial Pablic Offering is the first public offering of the securities to investors. It also suggests that the company first launched its securities on the stock exchange and offers them a wide range of people.
It is in the primary market of securities of the company increases its capital from the sale of shares and bonds, the capital contributes to improvement of the financial situation, necessary for the production process.
Securities that have been issued again, called primary placement or emission, and the company, which puts the securities of the Issuer (the issuer). The investor (investor) is referred to as the person who buys these securities. Party (market participant) on the primary securities market can be both an investor and the Issuer.
The primary securities market - the Way of placement on the primary market of securities
The primary placement is performed in two forms - in the private and public form.
private placement - this is when the securities are sold a certain number of persons (the number is composed of one or two institutional investors). Honors private placement - is the closeness of the transaction. Do not impose requirements for the disclosure of financial documents.
public offering is when securities are placed and sold with the help of intermediaries. Such intermediaries can be as institutional brokers, as well as the stock exchange.
As for the investment Bank, issue of new securities companies to become too big, he in this case uses the services of other investment banks, with the purpose to organize the «share premium syndicate» and unite for the placement of this issue. The primary market of securities
To example, the owner of the factory for the production of a basin in order to find capital акционировался, and sold a part of actions at a stock exchange, such an operation an example of transactions in the primary market is called the IPO (Initial Public Offering) and means the first public output on the share market and it becomes the Issuer. On the primary market is the sale of securities of their first owner, investors. The first placement may not be made public. Securities of the company can sell a certain circle of persons, without public disclosure of financial information. But in any case all subsequent transactions with the already placed securities will be carried out already on the secondary market.
Buying up of securities may engage in both institutional and individual investors. The ratio between them is determined by the state of the credit system, the level of savings, the level of economic development. On the securities market of the developed countries, leading positions mainly occupied with institutional investors, among them are: the pension funds, mutual funds, investment funds, insurance companies, commercial banks, etc.
Therefore, the primary securities market - this is the place where the Issuer constructs a new issue of securities, in order to place them among investors. Joint-stock company of its securities may be placed by means of closed and open subscription. Open society may independently determine the method for the placement of its shares: in the Statute or the decision of the General meeting and is used by open subscription to its shares; closed joint stock company uses only the closed subscription.
One of the causes of the issue of new shares may be absorption (consolidation, merger) companies. Swallow the company used the form of the exchange of shares for the merged companies for their shares. Such companies take an active part in the primary market, by producing an issue of new shares.
The second reason of entering into the securities market may be in the fact that the company wants to reduce the share of debt capital, which is the aggregate capital of the company. Some of the countries the ratio between the borrowed and own capital set by the law. But, despite the presence of law, each country has a clear idea about the permissible amount of borrowed funds. The excess of these dimensions, can lead to risk the company and its shareholders. In such a situation the company by issue of new shares (replaces their debt obligations), to adjust the structure of their capital. Thus, in developed countries at the present stage of development of the market of the issue of new shares are very small, and it is not always connected with the free money resources for financing of the economy. All of this means that the scope of the primary market in the developed countries reduced and reduced its role as a regulator of investments and the economy as a whole.
The Russian securities market there are now at the stage of its development. The conditions in which the mass housing maintenance state-owned enterprises, lead to the creation of new joint-stock structures, badly in need of investment, the primary securities market will be a key segment for such purposes.
Regardless of the fact what is the form of the placement of securities through an agent or through a direct appeal to the investor - the preparation of the issue of securities includes a number of stages.
The primary securities market and its benefits
Of course, first of all, the primary market carries out the mobilization temporarily of free capital and invest them in the economy. But he not only is an engine for the expansion of savings of the national economy, he is also engaged in the distribution of funds according to the spheres of the national economy and industries. In conditions of market economy the criterion of the placement - are incomes, which bring the securities. This suggests that free cash flow in the spheres of agriculture, industry and enterprise, in consequence of which ensure the maximization of income. From the point of view of market criteria, the primary market is the means of creating an effective and comprehensive structure of the national economy, and also with the help of balanced by the proportionality of the economy under the profit, which exists at the moment for individual sectors and enterprises.
On this, the primary securities market actually is the regulator of the market economy. It greatly determines the size of the savings and investments of the country.