In this article, we will discuss how to invest in Unlisted Shares in India. But first, let us get to know what exactly unlisted shares are.
Unlisted Shares are the shares that belong to a company which are not listed on any of the stock exchanges in India. The main advantage of investing in Unlisted Shares is that you get the exposure of new age businesses which are high on innovation and/or you can get the shares at discounted prices compared to listed stocks.
When we talk about ‘high on innovation’, the first thing that strikes us is Start-ups. Indian start-ups are doing enormously well and coming up with unconventional ideas and disrupting existing business models. AS WE SAY – PRODUCT MODEL INNOVATION COMPANY OR BUSINESS MODEL INNOVATION COMPANY. We cannot deny the market size that the Indian sub-continent offers; This not only helps the businesses grow and expand but these start-ups are fast becoming unicorns from dreamers.
India got 7 Unicorns this year. Imagine! Despite the lockdown these start-ups are carving their niche. This makes the Indian share market all the more lucrative. So as and when the demand is rising for the unlisted shares the question of how to invest also comes up.
Let us understand How to Buy and Sell Unlisted Shares in India?
Although people find it difficult to make a correct choice about buying and selling unlisted shares in India, there are several ways to invest in unlisted shares.
At Rurash, we have been facilitating our investors in this exercise. Our processes of buying and selling the unlisted shares are easy, transparent and detailed. We deal with NRIs as well as domestic investors and provide the best deals in unlisted stocks, pre-IPOs as well as listed stocks.
Here is how you can also buy and sell unlisted shares in India.
1. Buy PMS or AIF
PMS (Portfolio Management Services) or AIF (Alternative Investment Fund) services cover buying and selling of Unlisted Shares.
PMS and AIF manage a lot of shares. They pick up Unlisted shares too. So investing in PMS or AIF allows you to invest in Unlisted Shares. We offer personalized portfolio management services with a designated wealth custodian simplifying your wealth creation journey. The custodian will do your risk profiling, financial goal setting and accordingly recommend you the allocation of funds to insurance, direct equity as well as unlisted equity.
You can sign up here to subscribe to our PMS services.
2. Buy from Employees
Companies offer stock ownership plans to employees by giving them the opportunity to buy and sell a certain number of shares in the company at predefined price after a predefined period. At Rurash, we help our clients with such transactions related to buy backs and ESOPs.
We not only help in terms of trade facilitation but also help our clients for their funding needs.
3. Buy from Promoters
Many investment banks and wealth managers facilitate purchase of these private assets. Stock Brokers and Dealers also source the unlisted share transactions from promoters willing to divest their stake.
4. Start Ups
Many start-up companies provide buying of these private assets. These are majorly online based and the buying/selling takes place on the website.
These companies are experts in this field and provide the best of guidance and services.
The official websites of these start-ups are user friendly and have all the details of unlisted shares.
5. Equity Crowdfunding
Is the online offering of private company securities to a group of people for investment and therefore it is a part of the capital markets?
Equity crowdfunding is a mechanism that enables broad groups of investors to fund startup companies and small businesses in return for equity.
Buying and selling of Unlisted shares was not easy. But now that can happen online without any hassle. But always remember that you need to understand your risk appetite and then invest. Reach out to us for a complimentary risk profiling or speak to a stock expert to know all about investments in unlisted equity.
Are you thinking if it is safe to invest in Unlisted Shares?
Investments in Unlisted Shares are sometimes lucrative. Though high risk, unlisted equity investments spin money in no time. Experts believe that informed investment is the way to get returns in unlisted stocks.
If we look at the growth of unlisted shares in the last decade, the average portfolio returns on unlisted stocks is around 26 percent whereas the rate of return is around 16 percent in terms of listed securities. Check this guide to unlisted securities here.
However experts believe that these stocks come with their own liquidity risks and that is why a novice investor is most likely recommended to stay away from unlisted stocks unless they opt-in after detailed risk profiling.
If you understand the market dynamics and are ready to roll money into unlisted stocks for a minimum duration of two years, you can expect good returns. For in-depth understanding about the unlisted shares, best deals in unlisted stocks, Pre-IPO and post IPO analysis etc, sign up now with Rurash or request a call back from our representatives.