Primary market is a place where a corporate may raise capital by way of a :

1. Public Issue :  Sale of securities to member of the Public.

2. Rights issue :  Method of raising further capital from the existing shareholders/debenture holders by offering additional shares to them on a pre-emptive basis.

3. Private placement: As its name suggests it; involves selling securities privately to a group of investors.

 All issues by a new company has to be made at par and for existing companies the issue price should be justified as per Malegam  Committee recommendations by

  • The earnings per share (EPS) for the last three years and comparison of pre-issue price to earnings (P/E) ratio to the P/E ratio of the Industry.
  • Latest Net Asset Value.
  • Minimum return on increased networth to maintain pre-issues EPS. Accompany may also raise finance from the international markets by issuing GDR’s and ADR’s.
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