PDSnet Glossary

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Definition

The market for shares when they are first sold by a company to raise capital. New issues and rights issues are examples of activity on the primary market. Once the company has sold the shares, they enter the secondary market and are sold and bought between members of the public without it in any way changing the capital structure of the company. So a company does not benefit directly from the secondary market - but you can't have a good primary market (to raise capital) if you don't have an active and liquid secondary market. One of the main purposes of obtaining a listing on the JSE (or any organized exchange) is to enable the company to raise the capital it needs for expansion in the primary market. Usually this is done by way of an "initial public offer" (IPO) when the company lists or by way of a rights issue to existing shareholders.

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