How can One Invest in a Company Before it is Listed on the Stock Exchange?
Every investor would have thought about this question ” Are there companies unlisted in the stock exchange? and Is there any possibility of investing in them?” Well, the answer to your query is YES! Many companies are unlisted in the share market, and you can invest in those stocks to fetch returns from your investment.
In this blog, we’ll discuss what an unlisted share is, its benefits, and how an investor can invest in those unlisted shares?
What is an Unlisted Share?
Unlisted shares are not listed on the stock exchange. Investors prefer to invest in the unlisted shares to get access to the new-age businesses that are highly dependent on innovations. If you want to invest in new business ideas, then unlisted shares are the perfect option for you!
However, if you have decided to invest in the unlisted shares, you should never forget to analyze the potential and the capability of the company to excel in the future. Because most companies have failed to achieve the market goals, which in turn drains out the investor’s investment hence, before investing your savings on an unlisted share, seek the guidance of a trusted brokerage firm like Goodwill. They will guide you to choose the best-performing stocks and help you to get profitable returns. Click here to know more!
Now, we’ll discuss some significant risks and benefits that are associated with the unlisted shares:
Perks & Risks of Unlisted Shares:
- As an investor, you could benefit from exponential gains and the privilege to diversify your investment portfolio.
- You can negotiate the share value and can have a close market investment with no worries.
- The primary risk factor associated with unlisted shares is that they do not have a regulatory framework and formal market for trading. These unregistered shares also offer illiquid investments with uncertainty for the investors.
How to Invest in Unlisted Shares?
- INTERMEDIARIES & START-UP: Some start-ups offers you to own private assets through a DEMAT account with less investment. These companies will help you sell the stocks by finding buyers, but they won’t assure you whether the sale will occur. It also has a counterparty risk where you should transfer the fund initially without any assurance. Before investing in these companies, always get expert support.
- PURCHASE EXISTING EMPLOYEES WITH ESOP’s: This is a specific situation where the company would sell its shares to the employees. The company distributes the stock ownership to its employees by providing them with an opportunity to buy some shares at a predefined price for a predefined period. To invest in these stocks, seek the guidance of trusted brokers like Goodwill!
- PURCHASE FROM PROMOTERS DIRECTLY: Many investment banks and wealth managers facilitate the purchase of these private assets. You would be driven to purchase these private placements and will probably buy a significant amount of stakes.
- PURCHASE FROM PMS OR AIFS: Financial institutions running PMS and AIFS would also purchase unlisted shares. Most of these funds are invested in pre-IPO’s to take advantage of the rise in valuations. But, remember there is a chance for the stocks to fluctuate once it’s listed on the stock exchange. Hence, analyze the risk factors and cautiously make your investment moves!
- ANGEL FUNDS/ EQUITY CROWDFUNDING PLATFORMS: This is an investment option where an investor invests in a new business venture in exchange for preferable equities.
Choosing Unlisted Shares:
Unlisted shares are profitable only if you select a company with the vision to succeed and innovations to enhance the future. The benefits here are fascinating, but there are also substantial risk factors that are associated. Hence, while choosing an unlisted share, conduct an in-depth technical and fundamental analysis if you wish to succeed in it!
If you require an expert to analyze the best-unlisted shares in the market, then it’s time for you to get expert assistance from Goodwill. Goodwill is an award-winning trading firm, and investors rely on them for its exceptional customer support and reliability.
For more info, visit the official website of Goodwill or make a call on +91 80122 78000 to trade your stocks smartly and efficiently. Stay connected with Goodwill’s Facebook Page and get instant live updates on your stocks.