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priority areas where there is an urgent need to promote balanced and diversified
industrialization.

The capital market satisfies the tastes of savers and the needs of investors through its various financial
instruments and institutions.
As per entrepreneurs requirement they enter either of the following markets available under capital
market:
(i) Primary market (new issues market)
Primary market is basically to facilitate transfer of resources from the savers to the entrepreneurs
seeking funds for:
a) Setting new enterprises
b) Expanding
c) Diversifying
The 'new issues' may be issued by:
1) New companies – also called initial issues.
2) Old companies – also called further issues.
Initial issues
The entrepreneurs highly bank on this type of "issue" to generate funds. When for the first time,
entrepreneur for the purpose of obtaining capital funds decides to issue securities to the public its first
sale is in the primary market. Such issues of securities" are even referred as "new money issues".
Methods of flotation of new issues
An entrepreneur can raise the required capital in the primary market by the following methods:
1. Public issue
2. Rights issue
3. Private placement
4. Offer to the employees
1. Public issue / going public
Public issue is the most popular method of raising capital these days by the entrepreneurs. This involves
rising of funds directly from the public through the issue of prospectus. An enterprise organizing itself as
a public limited company can raise the required funds commonly by preparing a prospectus.
One of the most difficult problems in the new venture creation process is obtaining finance. When an
entrepreneur decides to go public and become a public company, he tends to be in advantageous
positions because of reaping the following benefits:
1) Access to capital
The primary advantage an entrepreneur stands to gain by going public is access to capital. In addition,
the capital does not have to be repaid and does not involve an interest charge.
The only reward the IPO investors seek is an appreciation of their investment and possibly dividends.
Entrepreneur can use the capital raised for a variety of purposes including:
(1) Growth and expansion,
(2) Retiring existing debt,
(3) Corporate marketing and development
(4) Acquisition capital.
(2) Other advantages
a. Mergers and acquisitions: Public stock of a company can be used for businesses to grow
through acquisitions.
b. Higher valuations: Public companies are typically valued more than private companies.
c. Benchmark trading price: The trading price of a public company's stock serves as a
benchmark of the offer price of other securities.