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A share purchase issue occurs when a company offers additional shares to existing shareholders at a discounted price, often as a way to raise capital. This type of issue gives shareholders the opportunity to purchase more shares at a lower cost before the shares are offered to the general public, helping companies raise funds while rewarding loyal investors. However, issuing more shares can dilute the value of existing shares.
A company might offer existing shareholders the option to purchase additional shares at a 10% discount, helping the company raise capital while allowing investors to increase their holdings at a lower price.
• An offer for existing shareholders to buy new shares at a discounted price.
• Helps companies raise capital while rewarding current investors.
• Can result in the dilution of existing share value.
It’s a cost-effective way to raise funds while offering loyal investors discounted shares.
It may dilute the value of existing shares if the total number of outstanding shares increases significantly.
They can acquire more shares at a lower price, potentially increasing their ownership stake and benefiting from future price increases.
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