Primary and Secondary Shares Send Money to Different Places
"The IPO raised €200 million" sounds clear. But who actually received the money?
Why this matters for beginners
Primary money funds the company. This is general education, not personal advice.
Main explanation
Primary shares are newly created. 10 million at €20 means €200 million goes to Summit.
Secondary shares are sold by existing owners. 10 million at €20 means €200 million goes to those sellers, not to Summit.
Mixed offering: 6 million primary and 4 million secondary at €20. Summit receives €120 million; existing sellers receive €80 million.
So the headline amount can be misleading until you check the split.
Example using a real company
Summit's mixed IPO: €120 million to the company, €80 million to selling early investors.
- →All primary: €200 million to the company.
- →All secondary: €200 million to sellers.
Common beginner mistakes
- ✕Assuming all IPO money goes to the company.
- ✕Ignoring insiders who are selling.
Key terms
- Primary shares
- New shares; money goes to the company.
- Secondary shares
- Existing shares sold; money goes to the sellers.
Key takeaways
- 01Primary money funds the company.
- 02Secondary money goes to selling owners.
- 03Check the split behind any headline.
Check yourself
- 016 million primary shares at €20: money to Summit?
- 024 million secondary at €20: who gets the €80 million?
- 03Do secondary shares increase the total share count?
- 04Why can "raised €200 million" mislead?
Try the concept on a real company
Open a company in the Analyzer and ask which of these mechanics could explain its recent price moves.
Educational examples only. Not buy or sell recommendations.