Winning Business Desk
Mumbai. Do you know that you can invest in a private company by buying unlisted shares even before its IPO. The biggest reason for investing in such stocks is the potential for strong returns. In fact, companies sell such shares at a discounted price to attract investors. Unlisted shares are likely to rise in terms of price if the IPO comes up and is becomes successful, resulting in substantial profits for the investors. If you also want to buy unlisted shares then you must have a demat account. The transfer of such shares is done online only to ensure transparency, protect the interests of investors and ensure governance in the corporate sector. We show you how you can buy unlisted shares.
From company employees
In the early stages of business growth, most private companies offer Stock Ownership Plans (ESOPs) to retain employees and create a feeling of being a part of the company. Unlisted shares can be purchased from such employees.
The shares of startups are bought and sold on their website. A minimum investment of Rs 50,000 has to be made in such shares. Shares will be credited three days after payment.
From the promoters of the company
Promoters have a major stake in every company. You can buy unlisted shares from them through private placement. Through private placement, promoters can sell their shares to specific people or a select group. Such investors cater to the specific needs of the promoters.
Through financial institutions
Financial institutions typically manage investments in unlisted stocks. They invest in a large number of unlisted stocks, as the price is low. Investors willing to take high risk and get strong returns can buy unlisted shares from such institutions.
From crowdfunding platform
Most startups raise capital through crowdfunding. In this, a large group of investors together buy unlisted shares. With this, a large amount of capital is arranged at once. This is the reason why crowdfunding is very popular among startups.
Investing in unlisted stocks has higher cost and risk
Before investing in unlisted shares, it is important to check the valuation of the company. The risk involved is high, so this investment is not for investors with a low risk profile. Invest in unlisted stocks only if you have huge capital, which you want to invest in risky assets and earn huge profits in the long run. Also keep in mind that the IPO of the company you are investing in may not come. Such transactions are associated with high commissions and the company may even disappear.