10.19What is a fresh issue?
1What is it?
A fresh issue creates new shares; the money goes into the company for the stated objects.
2Why does it exist?
It funds growth or debt repayment, but dilutes existing holders (more shares in total).
3Calculation
Post-issue shares = Pre-issue shares + New shares
- Pre-issue 90 crore + fresh 10 crore = 100 crore shares.
- Promoter with 60 crore shares: 66.7% → 60%.
Promoter diluted from 66.7% to 60%.
4Quick revision
- New shares; money to company.
- Causes dilution.
5Knowledge check
Q1. Fresh issue money goes to?Show answer
The company.
Q2. Does a fresh issue dilute owners?Show answer
Yes.
Q3. Can an IPO have both fresh issue and OFS?Show answer
Yes, many do.