What are Unlisted Shares?
Shares of a company that are not yet listed on the Stock Exchanges like BSE, NSE are called Unlisted Shares. Pre-IPO shares are of companies who have initiated the process of IPO (Initial Public Offer), for listing their company on a Stock Exchange
Less Market Volatility
Get Higher Returns
Undervaluated Rates
Pros of Unlisted Shares
Why should you invest in unlisted shares?
Investing in Unlisted Shares has its pros and cons but only the well-informed wins max benefits.
1.
Easy Access
You can invest in top unlisted companies before it is available for the masses. You may also be able to invest in unlisted companies at a discount to its listed peers.
2.
Diversification
Unlisted Shares are a good investment to have in your portfolio for diversification purposes. They are fairly uncorrelated to other assets like listed shares, mutual funds, FD's, etc. & provides higher returns as compared to them
3.
Uniqueness
You may be able to invest in unique industries which don’t have any representation in the listed space but are capable of higher growth than usual listed shares.
4.
Early Access
Investing in unlisted stocks provides early access to innovative and high-growth potential companies. These companies may be working on groundbreaking technologies that are not yet available to the public.
Cons of Unlisted Shares
What are the risks of investing in Unlisted Shares?
Investing in Unlisted Shares has its pros and cons but only the well-informed wins max benefits.
1.
Liquidity Risk
Since Unlisted Shares are not traded on an exchange, it is difficult to sell it on the exchange. We suggest that an investor should not invest in Unlisted Shares with a mindset of trading or selling it in a short period of time. One should be prepared to hold it for a few years at least or until the IPO of the share.
2.
Lock-in of Shares
There is a lock-in period of six months if you have the shares of a company that announces an IPO and is getting listed on the stock exchange. You cannot sell such shares for six months from the date of listing.
3.
Market Risks
Unlisted Shares are also subject to market risks & price risks, similar to their listed counterparts.
4.
Limited Information
Information on unlisted companies is less accessible compared to listed companies. This can make it challenging to assess the company’s management and operations effectively. While some unlisted companies like SBI Fund Management and Care Insurance provide transparency, many do not.
Cons of Unlisted Shares
What are the risks of investing in Unlisted Shares?
Investing in Unlisted Shares has its pros and cons but only the well-informed wins max benefits.