What Is Primary Market?
An IPO sign inside the Euronext NV Paris stock exchange. Companies use the primary market for raising capital, which is required for growth of business. (Photographer: Cyril Marcilhacy/Bloomberg)

What Is Primary Market?

This is a series of explainers to educate and inform new investors. In association with Dun & Bradstreet India as knowledge partner.

Primary Market: Definition, Meaning & Basics

Primary market is a key component of access to capital markets, a place where new securities are issued by a company. These securities can be either shares, bonds or non-convertible debentures.

Companies use the primary market for raising capital, which is required for growth of business, or for inducting new investors. An initial public offering, or IPO, is one such means, wherein new shares are issued. Securities in the primary market are issued basis book-building or a uniform price method.

As primary market is not a formally organised place like a physical market, securities can be issued here using stock exchanges or by making paper-based applications for subscription of securities.

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