Offer for sale
Also called: OFS
The part of a share sale in which existing shareholders sell their own shares to the public, so the money goes to them, not the company.
Many IPOs combine a fresh issue with an offer for sale (OFS). In the OFS, promoters or early investors sell part of their holding. The company does not receive this money.
The split between fresh issue and OFS tells you how much of an IPO is raising money for the company and how much is a way for existing owners to sell.
Example
An IPO of ₹1,000 crore made up of a ₹300 crore fresh issue and a ₹700 crore offer for sale gives the company ₹300 crore (less expenses). The other ₹700 crore goes to the selling shareholders.
Learn more in these lessons
- Primary and secondary marketsWhat is the difference between the primary and secondary market?
- IPO basicsWhat is an IPO and how do you apply for one?
- Evaluating an IPOHow do you judge whether an IPO is worth investing in?
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