How companies are using secondary offerings to buy assets

I noted last week that this week is the biggest of the year for IPOs. Fourteen are expected to price, and more than $2 billion is expected to be raised.

But one space that has escaped market watchers' attention is the secondary market, which dwarfs the IPO market.

For example, there were 10 secondaries announced last night. Think about that: 10.

And here's what's important: Much of the proceeds are being used to buy things.

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That's right—to buy things. Companies. Hotels. Pipelines. Retirement centers.

Not surprisingly, many are in the energy and real estate fields.

"These are people with very deep interests in their field, and they know when assets in the their fields are cheap," David Menlo of IPOfinancial.com told me. He added that it is generally cheaper to buy than to grow organically.

"To buy a pipeline, for example, is a tremendous capital expenditure. Building new hotels, or senior citizen centers, is more of a risk than buying what's already there because you have a track record with the existing properties. There's verifiable cash flows."