Fresh issue: the company sells
In a fresh issue the company creates new shares and sells them. The money goes into the business — a plant, repaying debt, working capital — and the share count rises.
Bharat Foods created 20 lakh new shares at ₹150 and raised ₹30 crore. Its share count went from 80 lakh to one crore, which is where the number you have been using since the first lesson comes from.
Note the ₹150. Face value is ₹10, so ₹140 of every rupee paid was premium — the price of the business, not the paperwork.
Offer for sale: the owners sell
In an offer for sale no new shares are created. Existing shareholders — usually promoters or early investors — sell what they already hold. The money goes to them.
Bharat Foods' promoters sold 5 lakh of their own shares in the same issue, taking ₹7.5 crore off the table. The company received none of that, and its share count did not move by a single share.
- Fresh issue
- 20,00,000 new shares × ₹150
- Offer for sale
- 5,00,000 existing shares × ₹150
- Headline issue size
- ₹37.5 crore
Both halves are legal, ordinary, and disclosed. Only one of them funds anything.
Move the split, watch the money change destination
Same issue size throughout. Only the proportion changes.
Drag to zero. An issue can be entirely existing owners cashing out, with the company raising nothing at all.
Why this is worth checking
An offer for sale is not a scandal. Early investors are entitled to exit, and someone has to sell for a market to exist at all.
But the two halves answer different questions. A large fresh issue tells you what the business intends to do next. A large offer for sale tells you what the people who know it best have decided to do with their stake.
An IPO is entirely an offer for sale. What does the company receive?
Once the issue closes and the shares list, the company steps back. From that day, every rupee that changes hands over those shares goes somewhere else.