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What Is Subsequent Offerings?

When a privately held company goes public through an initial public offering (IPO), that transaction marks a major milestone. However, the IPO is often not the end of the story when it comes to a company raising investment capital from public markets. Many issuers end up conducting subsequent offerings after already being publicly traded.

This article covers the mechanisms, motivations and implications of these follow-on issuances in depth from both corporate and investor standpoints.

What are subsequent public offerings?

A subsequent public offering refers to when a publicly traded company sells additional new shares to investors after its IPO. It is an extra stock distribution from a firm that is already publicly listed and traded.  

Companies conduct subsequent offerings to raise extra capital as per growth needs. The funds usually serve business plans, repaying debt, operational expenditures, acquiring assets, or other requirements.

These offerings allow existing publicly traded firms to increase available shares and bring in fresh financing through markets. Since the company trades publicly, the additional shares are listed quickly under current symbols.

Key factors for subsequent offerings

Companies typically utilise subsequent offerings for these key reasons:

1. Growth Capital: Sometimes businesses need more money to grow. They might need it to make new products, tell more people about their products, or start selling in new places. That’s why they might look for ways to get more money, like borrowing or finding investors.

2. Debt Repayment: One way to improve your financial situation is to pay off high-interest loans and reduce your overall debt. This can help you save money and reduce your financial stress.

3. Acquisitions: When companies want to grow and buy another company, they have two options – they can use their company shares to buy the other company, or they can use cash. If they use cash, it means that they are not giving away any of their company ownership to buy the other company. This can be a good way for a company to expand without losing control of its own business.

4. Operational Needs: If you’re operating a business that requires manufacturing, maintaining inventory, compensating employees, or covering other expenses, you may require some financial assistance to maintain operations.

Types of subsequent offerings

There are two main structures of subsequent offerings:

1. Dilutive subsequent offerings: When a company issues additional shares, the total number of outstanding shares increases, which dilutes the ownership of existing investors.

2. Non-dilutive subsequent offerings: No additional shares are issued; instead, current shareholders sell some of their existing shares. The overall number of shares remains unchanged.

In non-dilutive subsequent offerings, selling shareholders include company founders, directors, or other insiders trimming their positions. 

The anatomy of subsequent offerings 

Subsequent offerings have some structural mechanics common with IPOs while differing in certain aspects:

  1. Issuer Profile

Only publicly traded companies can conduct follow-on offerings, which are available to businesses with established business histories, unlike IPOs.

  1. Offering Method

Public companies issue new shares when existing shareholders sell their holdings, unlike IPOs, where private companies offer shares to public investors for the first time.

  1. Pricing Process

IPO offer prices are initially determined by underwriters based on an analysis of demand. However, the final prices are determined solely by market levels, without any input from underwriters.

  1. Issuance Purpose

After an IPO, subsequent capital raises are aimed at financing growth plans, acquisitions, or debt reduction, while IPOs are aimed at transitioning companies from private to public.

  1. Regulatory Compliance 

IPOs require full regulatory registration and approval, while subsequent issuances involve shorter and simpler filings by leveraging the established status of a public company.

Therefore, subsequent offerings refer to simplified financing transactions that build upon the groundwork laid by the preceding initial public offering (IPO).

Pricing of subsequent offerings

When a company goes public through an initial public offering (IPO), the offer price is set by underwriters. But when the company issues more shares later on, the exchange markets determine the pricing. In contrast to IPOs, the share prices in subsequent offerings are closer to the prevailing trading levels, and discounts are usually not as deep. 

However, sometimes, the announcement of additional offerings can cause a short-term price dip due to an increase in supply. Despite this, investors generally view subsequent offerings from reputable companies with good prospects as a positive development.

Key implications for investors

Prospective investors can buy into a publicly traded firm through primary markets, such as an IPO. However, subsequent offerings allow investors to analyse historical financial data and proven execution before investing.

For existing investors, a follow-on offering can maintain the balance sheet with cash inflow. However, it may result in a temporary drop in share prices due to dilution. Despite this, the cash generated can fund growth and effect longer-term gains. Investors should carefully evaluate the purpose and usage of the generated capital while making decisions.

The effects of a follow-on offering are mixed for employees holding equity compensation. Initially, a drop in share prices is possible. However, the inflow of cash can support business expansions that may lead to higher long-term share values. 

Analysing the implications

The impact of subsequent offerings are based on stakeholder perspectives:

  1. For Investors

Investors new to investing might feel more secure investing in a company that has already gone public through follow-on offerings rather than taking a chance on an untested IPO. However, it’s important to note that a sudden increase in the number of shares available can cause a temporary dip in share prices.

  1. For Existing Shareholders

Although the inflow of cash benefits the long-term growth prospects, it also directly reduces the ownership stakes of existing shareholders due to share dilution. Nonetheless, if follow-on issue prices remain above the purchase costs, this can offset the reduction in ownership stakes.

  1. For Employees   

The value of employee stock options may decrease due to overall dilution. However, if the generated capital is used to expand the company, the share prices may rise in the long run, which could ultimately benefit employee stock incentives.

Hence, subsequent offerings alter ownership dynamics for shareholders while facilitating corporate financing.

Historical subsequent offerings

Some major subsequent offerings in India over the years include:

  1. Reliance conducted India’s largest follow-on offering, raising ₹24,000 crores in 2020
  2. HDFC Life raised ₹3,000 crores through a subsequent issue in 2020
  3. Avenue Supermarts raised ₹4,000 crores in a follow-on offering in 2021
  4. Adani Ports conducted ₹800 crores follow-on issue in 2015

Publicly listed firms regularly generate material financing through subsequent offerings. Companies determine the offerings based on strategic capital requirements.


Companies can raise additional financing through subsequent offerings, which are a proven means to do so. For investors, these offerings provide a relatively lower-risk entry point to acquire shares in listings outside standard IPOs. Both corporates and investors can benefit from subsequent issuances by carefully analysing their purpose, usage viability, and effect on existing ownerships to achieve their respective objectives.


What exactly are subsequent offerings by companies?

Subsequent offerings refer to when already publicly traded companies raise additional capital by selling extra new shares to investors in follow-on public issuances after already conducting an initial IPO earlier.

Why might listed companies go for such subsequent offerings?

Typical reasons include:
Needing extra financing for business expansion plans.
Paying off expensive debt burdens through refinancing.
Funding large acquisitions with cash rather than equity.
Tapping favourable investor market conditions opportunistically at that time.  

What are the main types of subsequent issuances by structure? 

Structurally, they are of two key types – dilutive issuances, which increase total company shares amount, thereby diluting existing investors, versus non-dilutive ones, where existing shareholders offload a portion of their held shares to raise funds without altering the total shares count issued.

How do subsequent issuances affect investors in the company?

For prospective investors, it allows a follow-on entry point to buy into listed firms. For current investors, share prices may dip near term given increased supply hitting markets, but cash inflow benefits long-term growth potential. Employees may see stock options value drop initially, but higher growth ahead through capital raising brings greater upside ultimately.

How are subsequent offering prices fixed for issuances? 

Unlike IPOs, where underwriters anchor issues prices after Initial demand indications, subsequent issuance pricing happens directly through exchange trading price discoveries where the issuing entity offers discounts to prevailing traded levels instead of deep IPO discounts generally. However, short-term corrections still occur upon stock accumulation by institutions, forcing prices down slightly before again heading higher.

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