Companies undertake an IPO for one of two reasons:

1. To raise capital for the company's use (a primary offering).

2. To raise funds for the existing shareholders (including venture capitalists and governments, as in privatizations, etc.) (a secondary offering).

The terms primary offering or primary issue and secondary offering or secondary issue are often used to classify the recipient of the proceeds. Proceeds from a primary offering go to the company it creates and issues new shares for sale to the public. Secondary offerings sell existing shares to the public. Many IPOs combine primary and secondary offerings.

These differences are notable in the naming of public offers in the UK and Italy, where Offers for Subscription and Offerta Publicca di Sottoscrizione, respectively, refer to the sale of new shares and Offers for Sale and Offerta Publicca di Vendita, respectively, refer to the sale of shares by an existing shareholder.

The reader should be aware, however, that in some markets subsequent (or follow-on or seasoned equity offerings (SEOs)) are also called secondary offerings , regardless of whether primary or secondary shares are being sold. So one might have a secondary secondary offer, where existing shareholders sell further shares, or a secondary primary offer, where new shares are sold by a company already listed on an exchange. In this book, I regularly use the term secondary offering for follow-on offering.

During the 1990s, the global volume of IPOs rose from around $11 billion in 1990 to $155 billion...