Unlisted shares are equities or financial instruments that are not publicly traded on established stock exchanges such as NSE and BSE. These shares are available for trading outside the regulated markets by SEBI. The purchase of unlisted shares is also known as Over-the-Counter (OTC) trading. The unlisted shares are traded in grey markets. In these markets, only those shares are purchased and sold that have not gone public or do not meet the criteria for public listing yet.
What are the Different Ways to Buy Unlisted Shares in India?
There are various types of unlisted financial instruments such as common stock also known as capital stock, penny stock, corporate bonds, government securities, unlisted shares, etc. There are various ways of investing and buying unlisted shares in India.
- By Investing in pre-IPO companies: One can buy unlisted shares in India by investing in the companies that are planning to go public in the future. They are known as pre-IPO companies. These companies have a high growth potential and investing early before they go public can be extremely rewarding with high returns. Shares that are purchased from such investments are directly credited to the Demat account of the investor, bypassing the NSE and BSE stock markets. However, to purchase unlisted shares of pre-IPO companies, it is important to coordinate with a reputed intermediary or broker to facilitate the investment. Stockify is a trusted source for investing in pre-IPO companies.
- Investing in startups: One can invest in startups that show promising growth, however, most startups require minimum investment. Startups especially in the technology, e-commerce, and finance sectors often offer promising growth prospects. While most startups require a minimum investment, investing in the right startup at an early age can yield significant returns in the long run. To invest in startups, investors need to network extensively to identify promising startups and participate in their funding rounds.
- Direct Purchase of ESOPs from Employees: ESOPs are another technique to acquire unlisted shares in India. ESOPs allow employees of a company to purchase shares of their employers at a discounted price. Brokers can help in connecting with employees looking to sell their ESOPs by allowing the investor to invest in the unlisted companies.
- Direct Placement from Promoters: Under this option, the investor can purchase shares directly from the company’s promotes through private placement with the assistance of investment banks, wealth managers, or trusted brokers. Direct placement from promoters offers investors the opportunity to acquire shares at a negotiated price.
What are the Benefits of Buying Unlisted Shares of Pre-IPO Companies?
Investing in the unlisted shares of pre-IPO companies offers excellent benefits for investors who are seeking exponential growth opportunities and higher returns on their investments. Some of the key benefits include:
- Easy Access to High-Growth Potential: Investing in a pre-IPO company allows the investors to get access to shares ownership of the business that exhibits the potential for high growth and high returns. These companies are often in their early stages of development, that have innovative business models or disruptive technologies that have the potential to generate substantial returns in the long run.
- Potential for Significant Returns: By investing in pre-IPO companies, the investors have the opportunity to capitalize on the company’s future growth trajectory. This will allow them to participate in its success story from an early stage. If the company performs well and eventually gets listed by going public through an IPO, early investors who bought the unlisted shares benefit from the potential capital appreciation as well as have lucrative exit opportunities.
- Diversification of Investment Portfolio: Adding unlisted shares of pre-IPO companies to an investment portfolio can diversify the portfolio and reduce the overall risk exposure of the portfolio. It allows investors to seek new investment opportunities that are not available in the public markets and spread their risk.
- Flexible Investment Options: By investing in unlisted shares of pre-IPO companies, investors have flexibility in terms of investment size, exit strategy, holding time, etc. Investors can choose the amount they want to invest, the duration of their investment, and the method of exiting from their investment, i.e. sell through a secondary sale in the unlisted market or hold until the company goes public.
Interested in Purchasing Unlisted Shares?
By investing in unlisted shares, you get the opportunity to capitalize on early-stage growth prospects. Are you ready to diversify your investment portfolio with unlisted shares then look no further than Stockify. You can discover promising unlisted companies with our user-friendly interface and research insights. Whether you’re a seasoned investor or just starting your investment journey, our platform caters to investors of all levels. Sign up now and start investing in unlisted shares with Stockify.
