What is primary equity?

Primary equity refers specifically to the capital that a company raises through the issuance of new shares to investors. This is most commonly associated with public offerings and private placements where an organization sells its new shares directly to investors in exchange for capital to fund operations, acquisitions, or other corporate activities.

When considering the context of the options provided, equity raised from private investors is aligned with the definition of primary equity, as it reflects the act of acquiring funds through the direct issuance of shares rather than through the sale of existing shares on the market. This primary equity can come from venture capitalists, private equity firms, or accredited investors in a private placement scenario.

Although equity raised from common shareholders would seem like a plausible option, it generally refers to existing shares rather than new shares being issued. Furthermore, equity resulting from asset sales is not a form of equity raising but rather pertains to liquidity derived from disposing of assets. Lastly, equity that can be traded on public exchanges typically refers to secondary markets where existing shares are bought and sold rather than highlighting the original issuance of shares, making it distinct from the concept of primary equity.