What does 'primary equity' refer to?

Primary equity refers to the funds raised by a company through the issuance of new shares directly to investors. This typically involves offering equity to private investors, which can include venture capitalists, private equity firms, or accredited individual investors. The essential characteristic of primary equity is that it represents capital obtained directly from investors in exchange for ownership shares, allowing the company to leverage this funding for growth and operational needs.

In contrast, equity sold to the general public often refers to secondary offerings or equity that is already available in the market and is being traded, which may not qualify as "primary." Equity raised from institutional investors can sometimes overlap with primary equity; however, primary equity emphasizes contracts with individual or private entities rather than the public market. Finally, equity available for trading on the stock exchange constitutes secondary market transactions, wherein shares previously issued are bought and sold among investors, rather than directly from the company.