The mainstream investing and trading of stocks involves listed shares
while investing in unlisted shares at the fringes. The number of queries
regarding unlisted company
shares is continuously burgeoning, and people want to know how good the
strategy is, what it means, and so forth. We shall walk you through all the
related questions and provide answers to them here. Read on!
What are unlisted shares?
Unlisted shares refer to financial instruments or investment securities
that have not yet been enlisted on the stock exchange, unlike listed stocks,
which investors can find openly in the stock market and belong to companies
listed on the stock exchange board. Unlisted shares do not enjoy the level of
safety that comes with listed stocks due to constant backtracking and
regulation by the Securities and Exchange Board of India (SEBI). Despite this,
unlisted equity shares continue to relish favor owing to the growth
opportunities it promises and offers. Furthermore, lesser regulations supervise
the domain of unlisted shares. Thus, it poses a high risk to the investment as
well.
Ways to invest in unlisted shares
If unlisted stock trading and investment have piqued your interest
lately, you have resolved to proceed with the decision. Then you can get the
shares in the following ways.
·
Get them from the promoters/ employees of the company: Often,
pre-IPO companies, provide the unlisted shares to the current employees to
allow them a stake in the company. The sense of ownership in the company tends
to enhance the commitment and productivity of the employees. An interested
investor can choose to own a share in the unlisted company through this
method.
- Purchase directly from the company: If the investor comes
to know that the company is striving actively to raise funds, then he may
approach the pre-IPO company directly. Before investing, the investor
should consider evaluating the management objectives concerning the fundraising
and a detailed valuation.
·
Consider Wealth Management Firms/Brokers:
Stockbroking firms are typical for listed shares, unlike unlisted ones.
However, with the spike in startups emerging across the countries, broker
agencies have started to come up for unlisted equities too. You can engage
in unlisted shares trading with these firms that offer
portfolio management services.
Benefits of unlisted shares
Also called Over-the-Counter (OTC) financial securities, unlisted shares
are not traded openly. Instead, interested investors purchase them in other
ways. Careful investment in unlisted securities renders enormous returns. Often
pre-IPO company shares can be grabbed by the employers and promoters of the
company. When implemented with the right strategy and at the right moment,
investors enjoy huge returns if the IPO succeeds.
Furthermore, unlisted stock investment facilitates portfolio risk diversification. Unlisted shares are bound to go public when the company gets listed on the stock exchange. Then, the investment can offer considerable upsides. Nonetheless, wherever you invest in listed or unlisted shares, do regard the valuation metrics and the price. You can visit them for more helpful information.