#communityplatforms

In the dynamic world of online business, e-commerce has emerged as a lucrative avenue for entrepreneurs looking to make a steady income. If you aspire to generate $100 a day through e-commerce, strategic planning, and effective execution are key. In this article, we’ll explore practical strategies to help you achieve this financial milestone. Application smartphone mobile and computer payments…

Online community platforms are essential for fostering engagement, collaboration, and knowledge sharing. Whether you run an online course, a membership site, or a business seeking audience connection, choosing the right platform is crucial. This article e

Online community platforms are essential for fostering engagement, collaboration, and knowledge sharing. Whether you run an online course, a membership site, or a business seeking audience connection, choosing the right platform is crucial. This article explores the types of community platforms, offering guidance on selection and presenting the top 17 in the market. Understanding Online…

An unlisted company is one that is not listed on any formal stock exchange. However, shares of these company are sometimes available for trade on over-the-counter (OTC) markets. Examples of unlisted companies in India being traded in the OTC markets include: Swiggy, Oyo, Serum, CSK, Reliance Retail etc.  Previously, unlisted investment could only be accessed by big banks, hedge funds, private equity companies etc. However, today since shares are available in dematerialised format and there is much more awareness about the financial industry, it is possible for any investor to invest in trading unlisted shares. Today we will discuss some of the commons ways investors can trade in unlisted shares in India.

Pre-IPO Funds

The first way we can invest in unlisted shares is to invest via Pre-IPO funds. Pre-IPO funds specialise in investing in companies that are currently unlisted but will soon get listed on a formal exchange. Pre-IPO Funds pool money from investors and give them an opportunity to invest in companies before they go public at lower valuations and then to reap rewards of the post-IPO valuation. These funds are often availed by prominent retail investors, HNI’s and large family offices. The first AMC to come with dedicated Pre-IPO funds is IIFL AMC. As per information, they are managing Rs 10,000 crore in pre IPO funds, with returns in the range of 10%-15%. Recently, Kotak Investment Advisors also raised Rs 2000 Crore in their Kotak pre-IPO Opportunities Funds. 

Portfolio Management Services or Alternative Investment Funds

Another way to buy unlisted stocks as an investment is to avail Portfolio Management Services (PMS) or Alternate Investment Funds (AIF). These funds are professionally managed investment portfolios backed by extensive due diligence by a team of highly qualified research analysts. These portfolios are actively managed so that they are always adapting to market trends and performances. Investors can invest in PMS or AIF that specialise in unlisted shares. There is less risk via this route due to (i) thorough research (ii) professional management (iii) diversification of capital.

Intermediaries

There are intermediaries likebrokerage firms and wealth management firms that specialise in investing in the unlisted space. Investors can open a DEMAT account with these intermediaries and carry out the transaction through them. The payment gets completed upfront, and the delivery is done in T+3 days. Due to lack of official regulation in the unlisted space, there is counterparty risk involved. Counterparty risk is if the payment is made, however the delivery of the shares is not completed successfully. However, if the intermediary is of reputable name, the counterparty risk involved is minimised.

Employee Stock Ownership Plan

Some large-scale organisations offer their employees stock options known as ESOPs whereby employees get equity ownership in the Company. These ESOPs allow employees to buy the Company's shares at a prespecified rate and after a predefined period. If the employees wish to redeem or sell off their unlisted shares holding, investors can purchase unlisted equity from them.

Private Placement

Private placement is where promoters of a Company want to liquidate their own stake in the Company and therefore put their equity ownership up for sale. Usually, this process is carried out by wealth managers or intermediaries. This route allows investors to trading unlisted shares and to achieve a significant stake in the Company as promoters generally have high ownership percentage with them.

You can use the Stock Knocks website and app to get detailed information on unlisted stocks and hidden gems in India. Just Knock !