All You Need To Know About Unlisted Company Shares

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.

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