Seasoned Equity Offering

Investments

Quick Definition

A Seasoned Equity Offering (SEO) is the issuance of additional shares by a company that is already publicly listed to raise more capital.

Detailed Explanation

A Seasoned Equity Offering occurs after a company has already gone public through an IPO. It is also commonly known as a secondary offering or Follow-on Public Offer (FPO).

Companies use SEOs to raise funds for expansion, repay debt, or finance new projects. These offerings are conducted through stock exchanges like the National Stock Exchange and Bombay Stock Exchange under regulation of the Securities and Exchange Board of India.

Types of SEO

  • Dilutive SEO: New shares issued → ownership dilution
  • Non-Dilutive SEO: Existing shareholders sell shares → no dilution

SEO vs IPO

  • IPO: First-time public offering
  • SEO: Additional shares after listing

Why Companies Use SEO

  • Raise capital for growth
  • Reduce debt
  • Strengthen financial position

Impact on Investors

  • May lead to share dilution
  • Can affect stock price in short term

Example

"A listed company issues new shares to raise ₹1,000 crore for expansion—this is a Seasoned Equity Offering."

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