Wondering what are Unlisted Shares and how to invest in them? Welcome to the club.
If you have landed on this page, that means you are interested in exploring pre-IPO shares.
Unlisted financial securities can be beneficial for your portfolio if you know where to invest. See our top picks of unlisted shares.
But before that, it’s important to understand everything about unlisted shares.
Shall we?
As the name suggests, these shares are not listed on the official stock exchange. Yet.
These are privately held shares that may get listed in the future through the IPO process. You can only invest in them via Over The Counter (OTC) market.
What does OTC even mean? It means buying shares over the counter just like you buy a movie ticket. Well, not literally, but similar.
After buying, you receive these shares in your Demat account similar to any other shares. The prices of these shares will go up in a long run. Or whenever the company goes through the IPO process, you have a great opportunity to bag listing gains.
As unlisted shares are not traded on the stock market, the liquidity is not as flexible. But, it can be used to your benefit.
Most unlisted shares do not fluctuate in price as often as listed shares. They are either undervalued or overvalued and stay the same for a long time.
If you invest in them when they are undervalued, you can earn exponential returns.
There’s also a chance of earning listing gains whenever the company goes on IPO.
Here’s a successful performance of some of the recent listings of unlisted shares-
| Stock | Initial Investment Price | Listing Date | IPO Listing Price | Return Multiple |
| TATA Technologies | 230 | 30 Nov 2023 | 500 | 2.17 |
| Nazara Technologies | 430 | 19 March 2022 | 1101 | 2.56 |
| Anand Rathi Wealth | 160 | 6 Dec 2021 | 550 | 3.44 |
| One97 Communications | 1400 | 11 Nov 2021 | 2150 | 1.54 |
| Barbeque Nation | 228 | 26 March 2021 | 500 | 2.19 |
Note- Not all unlisted shares can offer exponential growth or higher listing gains.
Unlisted shares are a great way to balance your risk profile and diversify your portfolio. These shares are not as volatile as equity shares.
If you have invested in high or moderate-risk stocks, unlisted shares can balance the risk.
You don’t have to pay constant attention to the changing prices. That takes away all the worry about buying and selling these shares as the market changes.
One of the major benefits of investing in pre-IPO is allocation confirmation. Promising IPOs often get oversubscribed during the IPO. There’s a solid chance that you may not get any shares allotted to you.
Furthermore, when you invest pre-IPO, you already hold shares before the company goes live on the share market. This gives you an upper hand during IPO, which brings us to the next point.
The valuation of private companies grows exponentially before the IPO. There’s often a high demand for these shares just before the IPO. Since the supply is limited, the prices aka the premium for these shares shoot up.
For example, if the issue price for a share is 20Rs and the over-the-counter premium (price) is 40Rs, then people are ready to pay 60rs to get these shares before IPO.
Investors who already own the shares of these companies may earn a huge profit via pre-listing gains.
Taxation Before The Listing-
The income earned (Capital Gains) after selling the Shares is taxed as per the duration.
Taxation After The Listing-
If the unlisted shares get listed on the market, the taxation will be similar to any other listed stock.
Unlisted shares do not have SEBI or Stock exchange regulations on them. In order to have a secure buy/sell, you will need a trustworthy wealth manager to work with.
Unlisted shares may not offer higher liquidity as the buyers and sellers are fewer on the OTC market. You may have to wait until you find a buyer who is willing to purchase your shares at a suitable price.
For ease of selling/buying unlisted shares, contact VNN Wealth.
You might always face a lack of certainty in terms of valuation, company performance, and the possibility of earning listing gains. The only way to avoid uncertainty is by investing in known brands that are likely to get listed.
We have already hand-picked selective companies from the unlisted universe. You can get in touch with us to invest in your choice of unlisted shares.
The pre-IPO investment process is slightly different. You won’t find them on the stock exchange.
Here’s how you can buy unlisted shares with us-
1: Explore from the list of companies to invest in
2: Click on Invest Now on the shortlisted company
3: Enter Your Investment Amount
4: Fill in your details
5: Upload PAN copy & CML/CMR copy of your Demat account
Once you submit the details, our team will share account details for you to transfer the trade amount.
The shares will reflect in your Demat account within 24 hours.
Unlisted Shares can boost your investment portfolio if you invest in the right company. There is a possibility of earning listing gains, which will generate that extra alpha in your portfolio.
But the key factor to earning superior returns from these shares is to choose the right company(s).
You have the option of investing in many startups to known brands. But not all are going to give you listing gains.
We have already selected the top 5 unlisted shares for you. If you are interested in buying unlisted/Pre-IPO shares, get in touch with us today. Our advisors have been helping clients invest in unlisted companies for the past decade. Join them as you achieve your envisioned financial goals.
