What is secondary distribution?
Secondary distribution, also known as a secondary offer, is the sale of a large block of existing securities by a person or institutions that hold them. In secondary distributions, although securities are sold in large blocks because they are in an initial public offer, the securities holder receives sales, rather than a company that originally offered securities. Moreover, the number of securities on the market does not change because no new securities are generated.
most often institutional investors and corporations ensure secondary distribution. They may decide to sell large shares blocks for various reasons to increase capital to the need to diversify the portfolio. The sale is usually solved by a broker or investment bank that deals with the process of distribution of securities in a way that will not destabilize the market.
The sale price is usually determined based on the current value of the relevant security. An institution that deals with sale,It can discuss the possibilities with an institution holding securities to determine what the selling price should be and how secondary distribution should be offered. The aim is to obtain the best value from securities and this requires the timing of securities.
Usually, secondary distribution takes place outside the primary stock market. Blocks usually buy other corporations and institutions because they are often the only investors who can afford to buy securities in bulk blocks. However, private investors can also be involved in the sale and purchase of securities blocks. People with high net value and significant investments can buy securities in large blocks to organize a secondary distribution later to sell them for profit as soon as their value begins to Rise.
Due to the size of the transaction, sales must usually be registered with regulatory organs. RegulatorsThe opportunity to refuse sales if they fear that they could have a negative impact on the market. In addition, if the securities are publicly listed on the stock exchange, the stock exchange must grant permission to sell to take place outside the trade floor. Since trading in such a volume could significantly destabilize floors, if it happens on the floor, there are clear benefits for the stock exchange in terms of secondary distribution approval.