Buying unlisted shares is a popular trend that is witnessing a rapid surge among equity investors in India. Easy accessibility, increasing awareness, and cutting-edge applications of the internet played a vital role in the growing number of investors in the unlisted space. However, there is a consolidated process of buying pre-IPO stock or unlisted shares; every new-age investor must have concrete information about unlisted shares and how to buy unlisted shares of a specific pre-IPO company.
Unlisted Shares At A Glance
Unlisted shares, often referred to as over-the-counter (OTC) securities, are financial instruments that can be purchased over the counter. Unlisted companies usually do not trade on any recognised stock exchange. This is because smaller firms may not want to or are unable to meet certain requirements such as listing charges, market capitalization, and so on. Unlisted share has a specific market where sellers and buyers trade via dealers.
Different Types Of Unlisted Shares
Before investing in stocks of an unlisted company, an investor should check for the following factors to assess the company’s business opportunities.
1- Parent Backed
These companies are regulated by a well-established parent company that is listed on the stock exchange. For instance, Tata Motors is the parentage of Tata Technology, and Reliance Industries is the parentage of Reliance Retail.
2- New Age Companies
Nowadays, there are plenty of web-based businesses which are often referred to as startups. These companies hold expertise in a particular market, such as e-commerce, financial technology, artificial intelligence, Edtech, and more. Mobikwik, Oyo, and HDFC Securities are some foremost examples.
3- Independent Businesses
Such companies are involved in traditional business methods, but they do not have any parent company to back them. There are many autonomous commercial ventures that are not subsidiaries of any listed company.
How To Buy Unlisted Share?
If you are just beginning in the unlisted share market, buy unlisted shares of some of India’s finest companies that are not listed in the stock market through diverse methods. Some of them are mentioned below.
Buy Shares Of New Businesses & Intermediaries
A pre-IPO company is currently unlisted but intends to go public later. You can purchase pre-IPO stock companies since the shares are sent directly to your Demat account, even if the transaction is confidential and the exchange is not committed. When looking for a reliable share, look for someone who can efficiently assist you in closing the deal while avoiding any risks allied with financial transactions.
Alternatively, you can invest in unlisted start-ups with the potential for exponential growth in the future. These companies may not be getting exceptional results currently, but they have the possibility to provide profitability and growth in the future. Most start-ups need a minimum investment of Rs 50,000 to have equity put into your Demat account.
Buy Unlisted Shares From Promoters
If you are willing to invest a large amount in an unlisted company, you should get the assistance of a share broker or a wealth manager, who will let you understand and learn how to calculate the NSE unlisted share price. Moreover, a reputed share broker will connect you directly with the promoters of potential unlisted companies. Besides, they will keep you informed about leading unlisted companies that have shown a better growth rate in recent times.
Invest In Portfolio Management System
Portfolio Management Systems (PMS) are known to be professionally managed investment portfolios. In this situation, the portfolio manager alters the portfolio’s weight and composition based on market movements in order to maximise investors’ net returns. Investing in unlisted shares in India might be profitable through PMS plans that incorporate unlisted stocks in their investment strategy. This is significantly safer than direct purchase since the risk may be dispersed among the portfolio’s components. The portfolio manager dynamically eliminates and adds equities based on their performance.
Equity Crowdfunding
Equity crowdfunding is part of the capital market. When an unlisted company offers its securities to a specific group of people to invest, it is referred to as equity crowdfunding. It is a mechanism that allows investors’ groups to provide funds to startups and small businesses against the equity share. If you are new to equity crowdfunding, you can take the assistance of a reputable broker who will connect you with the investors’ group to invest through equity crowdfunding.
Online Trading Platforms
You can take the help of an unlisted share trading platform like Stockify. It offers the best user interface to track prices, easy registration using a demat account, and financial details about the company. Also, you get the ease of smooth payment modes that make investing fast and accessible for everyone. Platforms like Stockify are considered reliable sources as they have comprehensive customer support along with tutorials to guide investors in the right steps. It brings more transparency with a detailed report on your investment and tax bifurcation for your convenience.
Furthermore, these online platforms bring top experts to share their best tips and assistance to select share with high returns possibility. It regularly updates unlisted share prices, which will help the investor to make their decisions. All these relevant financial information and price charts assist investors in assessing the fluctuations. So, it will be your easy-go option to buy unlisted shares.
The unlisted share market offers numerous opportunities, but there are certain challenges and risks involved in it as well. When you are a novice to the pre-IPO share market, it is a smart choice to buy unlisted shares through a recognised stockbroker. Stockify is one such e-platform that provides inclusive help with investment in the pre-IPO market or unlisted shares. It enables investors to get early access to unlisted shares in India.