The offering price is typically the closing price from the day prior- by then the current price has adjusted for the dilution. Yes the underwriters sell them in the open market; starting with offers to their clients first who have indicated interest in the offering.

If the investment bankers fund the operation, how do they recoup the money?

1. Do they sell those shares in the open market?

2. Do they sell it to institutions?

Considering the impact of a secondary on the stock price, usually the stock price takes a hit. In that case if the bank were to sell those shares in the open market, they would take a hit. They are not gonna do that. So I guess its the institutions that gulp up majority of those shares. In that case I

fail to understand how different is a secondary public offering to institutions directly buying from company.