Stock market investing is exclusively known to people through listed shares. The prices, their rise, and fall are visible and public on the stock exchange. However, unlisted shares lie in oblivion to the majority of the investors out there, as they are not traded in the open market and neither registered on the exchange. Nonetheless, due to promising returns, investing in unlisted shares, despite the steep risks involved, is gliding into the mainstream share market. Here’s a simple guide for you on where you can buy sell unlisted shares, so you too can test the waters!
What are unlisted shares?
Unlike listed shares, unlisted stocks are not made available to the general public for trading. Rather, the interested equity investors seek them through intermediaries. Unlisted shares exist for the company has not yet recorded itself on the stock exchange through IPO (initial public offering) to sell its stocks. However, a listed company too can issue new shares which have not yet been put on the stock exchange list in addition to listed ones. Bartering unlisted shares is limited to closed markets and often entertains high risk in its investments. And this is unlike dealing in listed stocks, where a statutory body regulates the purchase and selling to a great extent, and hence, they occur transparently in the stock market.
Where to purchase unlisted shares?
To begin with, professional investors and people in the know recommend investing in unlisted shares specifically to high-risk takers. Although the returns here appear too alluring to repel, these come with a trade-off of involvement in intense risk. Since these shares are not listed on the stock exchange, you may not find them directly. Instead, there’s a way around for unlisted share buy that involves intermediaries, which we shall discuss here. Read on!
- Purchase ESOPs: You may get a broker to acquaint you with the employees of an unlisted company, who aspire to sell off their shares. You get these stocks after a certain period and at a pre-fixed price.
- Purchase Shares from promoters: This is another way of buying unlisted shares where you connect with the advertisers and promoters of a pre-IPO company. If you seek to establish a connection with these agents, you may approach a wealth manager, reliable investment bank, or broker.
- Invest in AIF and PMS plans: To participate in the unlisted share market, you can opt for PMS schemes that include unlisted stocks as well in their regime. Grabbing unlisted stocks this way further helps in diversifying the risk element of the investment portfolio, and ensures lucrative returns.
- Invest in startup companies: Choose a reliable intermediary, and invest in pre-IPO firms. Further, you can consider investing in start-up companies that are not yet listed on the stock exchange but show immense potential scale big down the road.
Investing in unlisted shares has its own risks and pros. Before rushing to invest weigh different aspects of the deal to avoid whining at the losses later.