Short answer: A secondary offering is the resale of shares that were already issued to the public, where existing holders sell to other investors on the stock exchange. The company that issued the shares receives none of that money. Secondary offerings come in two broad kinds: dilutive ones, where new shares are created, and non-dilutive ones, where they are not.
Last reviewed: 12 November 2026
At a glance
| Term | What it means | Key effect |
|---|---|---|
| Secondary offering | Resale of already-issued shares between investors | The company receives none of the money |
| Non-dilutive secondary | Existing shares change hands; no new shares are created | The company usually gains nothing |
| Dilutive secondary (FPO) | A listed company issues new shares | Existing holders’ percentage ownership falls |
| Offer for sale (OFS) | Promoters or large holders sell existing shares | No new shares are issued and the company gets no proceeds |
Why is it called a secondary offering?
An initial public offering (IPO) is a company’s first sale of shares to the public. Once those shares are listed on a stock exchange, investors can keep trading them among themselves. Trades of this kind are secondary because the shares were already issued, so the company is not selling anything new.
Sellers in a secondary offering are the existing holders. They might be early investors, employees, or the promoters who founded the company. Buyers are other investors who take those shares off their hands.
Who gets the money from a secondary sale?
The money goes to the investors who sell their shares, not to the company. The buyer pays the seller, and the company’s bank account is not involved. This is the main reason a secondary offering does not raise capital for the business.
This matters when you read news about a large share sale. A large sale does not mean the company has just received fresh funds. It means existing holders have sold part of their stake.
What is a non-dilutive secondary offering?
A non-dilutive secondary offering only transfers existing shares from one holder to another. No new shares are created, so the total number of shares in the company stays the same. The company usually gains nothing from it.
Dilution is a term for the fall in existing shareholders’ percentage ownership that happens when new shares are issued. Because a non-dilutive sale creates no new shares, it does not dilute anyone in that way.
What is a dilutive secondary offering, or FPO?
A dilutive secondary offering is also called a follow-on public offering (FPO). In an FPO, a company that is already listed issues new shares to the public. The company’s share count rises, and each existing shareholder’s percentage ownership falls.
The catch is that dilution happens even if you buy nothing and sell nothing. Your number of shares stays the same, but the company now has more shares in total, so your slice of it is smaller.
How does an offer for sale (OFS) work?
In an offer for sale, promoters or existing large shareholders sell their existing shares to the market. The company does not issue new shares and does not receive the proceeds. The sellers are the ones who receive the money.
An OFS is therefore the non-dilutive kind of secondary sale. It changes who owns the shares, but not how many shares exist. A large holder reducing its stake through an OFS does not add new shares to the market.
Worked example: a hypothetical company
The figures below are invented for illustration only and do not describe any real company.
Assume a company has 1,00,00,000 shares (one crore) in issue. Investor A holds 1,00,000 shares, which is 1% of the company.
- FPO (dilutive): The company issues 25,00,000 new shares. The total becomes 1,25,00,000 shares. Investor A still holds 1,00,000 shares, but that is now 0.8% of the company, down from 1%.
- Non-dilutive sale: Investor A sells 1,00,000 shares to Investor B on the exchange. The total stays at 1,00,00,000 shares. A now holds nothing, B holds 1%, and the company receives none of the money.
The example shows the core difference. An FPO changes the total number of shares, while a non-dilutive sale changes only who holds them.
What are the catches and risks?
The main catch of an FPO is dilution. Existing shareholders’ percentage falls, and the example above shows a drop from 1% to 0.8% with no action on their part. Anyone reading an FPO announcement should check how the new shares change their own percentage, using the figures in the offer.
The main catch of a non-dilutive or OFS sale is that the company gets nothing. A sale by promoters or large holders moves shares between owners but does not put money into the business. Treating an OFS as a sign of new funding would be a mismatch with how the transaction works.
A third point is that a secondary offering does not tell you the seller’s reason. The sale might be a partial exit by a founder, or a transfer between investors. The type of offering shows what happened to the shares, not why.
Frequently asked questions
Does the company get any money from a secondary offering?
No. In a secondary sale the proceeds go to the investors who sell their shares, so the issuing company receives none of the money.
Is an FPO the same as an offer for sale?
No. An FPO is dilutive because a listed company issues new shares, while in an offer for sale promoters or large shareholders sell existing shares and no new shares are issued.
Does an offer for sale dilute existing shareholders?
Not in the way an FPO does. An OFS creates no new shares, so the total number of shares does not rise.
Who can sell shares in an offer for sale?
Promoters or existing large shareholders can sell their existing shares to the market in an offer for sale.
Sources and last check
Facts in this article were checked against the sources below on 12 November 2026. Rules and figures can change; check the primary source before acting.
- upstox.com (broker education)
- kotakneo.com (broker education)
- icicidirect.com (broker education)
- zerodha.com (broker education)
This article is general information, not investment advice. MyFinanceBandhu is not a SEBI-registered investment adviser.