What is a follow-on offering?

A follow-on offering refers specifically to the process through which an already public company issues additional equity. This can occur after the company's initial public offering (IPO) and serves various purposes, such as raising capital for expansion, paying down debt, or funding new projects. When a public company decides to do a follow-on offering, it can sell additional shares to attract more investment and increase its capital base without having to go through the IPO process again.

This method enables the company to reach existing and new investors in the equity market, ideally at a favorable price, and can help boost liquidity in the company's shares. It is a strategic way for public companies to access further funds from investors who are interested in participating in the company's growth.

The other options do not accurately represent a follow-on offering. Creating a new public company relates to the IPO process, while investing in private equity funds and buying back shares from the market are entirely different financial activities. These alternatives do not capture the essence of what a follow-on offering entails.