To understand this, you need to understand why a company files for an IPO and why the shares really lists on the secondary markets.
When a company files for an IPO, the company has to clearly state the purpose for raising this capital from the public. This goes on record and SEBI takes a note of this. Any deviation from the stated purposes is taken quite seriously by SEBI and the company is held responsible. The stated purpose can be anything - operational expansion, repay debt (taken at higher cost of funds), or even provide an exit to promoter/early investors…or it could be a mix of all these purposes.
So if the company’s intent is to raise 100 Cr by issuing two million shares (works out to 500 per share), then upon successful issue, this entire 100 Crs goes towards the stated intent.
Liquidity is incidental, this is clearly not in the corporate agenda of companies.
Thats right. Once the company lists on the exchanges, the share price of the company has nothing to do with the operational activities of the company. Of course, soaring share price uplifts the mood of the employees and shareholders, but thats about it.
However, what really matters is that impacts the net-worth of its share holders which includes the promoters, employees, and literally anyone holding the companies shares.
Yes, this does help to extent, especially when the company decides to issue rights. The promoters can choose to raise additional capital from its existing shareholders by offering them new shares at a discounted price (generally lower than market price). Now, because the right issue comes at a discount and the share price is doing very well, the chances of rights being fully subscribed is high, and hence the company gets to raise additional capital from the existing share holders.
The secondary market is certainly not a zero sum game. Its a place where serious wealth gets created for both the promoters and its investors (long term especially). We have witnessed numerous examples of this in India - Reliance, Infosys , M&M, HDFC Bank, TCS, Kotak, Bajaj and the list just goes on. I’d suggest you read this book for more stories and inspiration of wealth creation from the secondary markets.