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The Financial Times Guide to Investing, 3rd Edition by Glen Arnold

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16

Companies issuing shares

Occasionally there are opportunities to buy shares directly from the company, rather than from existing shareholders. The company may be floating its shares for the first time on the stock market and offering new shares to outsiders to, say, raise money for future growth – called a ‘new issue’ or ‘initial public offering’ (IPO). Alternatively, firms that have been on the stock market for some time may need to raise more money for expansion or to replace debt financing (seasoned equity offerings, SEO). This can be achieved by selling new shares to existing shareholders in a rights issue. Or the company may offer its shares to outsiders in a placing or open offer. On the other hand, there are times when the directors ...

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