National Stock Exchange (NSE) or Bombay Stock Exchange (BSE) allow trading of listed equity shares. Unlisted financial instruments are securities that aren’t traded on any of the formal exchanges, instead, traded in over-the-counter (OTC) markets. Unlisted securities don’t meet the requirements of formal exchanges. The market-makers offer unlisted stock buy to facilitate profitable trading for the investors.
Government securities, corporate bonds, and certain OTC derivatives products like swaps are some other instruments that are traded in the market. Investment risks are heightened in unlisted shares’ trading. Such companies facilitate with no requirements such as company size and market capitalization. Although the trading of unlisted shares includes liquidity, interconnection, and counterparty risk, the investors reap higher profits from the unlisted shares trading.
Methods of Investment in Unlisted Companies
Pre-IPOs and Start-ups
A pre-IPO company is the one that is currently unlisted but planning to go public for attaining desired goals. The shares from the unlisted company are directly transferred to the Demat account, even if the transaction is off-the-record and there is no involvement in the exchange.
Unlisted shares trading calls for a trusted intermediary for smooth and transparent trading. Trustworthy intermediaries prevent you from the counterparty risks (risks of transferring money with no assurance of getting assurance of the shares).
Star-ups are another advantage for investors to invest in. Companies at the early stages have huge potential to amplify the profitability of the investors. Being an unpopular firm, these start-ups can grow in the future unexpectedly. An investor can invest Rs. 50,000 as the minimum investment amount in the stocks that will be moved to the Demat account.
Existing employees with ESOPs
Buying stocks from the existing employees of the unlisted companies is another convenient way to indulge in unlisted shares trading. Many companies provide stock ownership plans to their employees by offering them shares at a predetermined price than the market prices. However, unlisted shares have less transparency in the trading procedures but the investors don’t have to keep a market watch and understanding fluctuations of the shares’ pricing. Unlisted Assets assist you with safe and secured transactions of unlisted shares. Trusted brokers and intermediaries establish a link between the investors and employees who are interested in selling the shares after a period.
Purchase from promoters
Private placements allow direct investment in the companies. Wealth managers, investment banks, or brokers help you to become one of the stakeholders in the company by selling their shares. These help the investors to settle at a mutual fair value of the unlisted shares for mutual benefits.
To buy unlisted stocks from a trusted and secured platform, Unlisted Assets is the one. The team of professional experts acquaints you with the investment procedures in unlisted shares trading. Consisting of potential risks involved, Unlisted shares trading might be an unfamiliar concept for the newbie investors. Investment with Unlisted Assets will help you enhance your investment portfolio and funds’ liquidity at the time of cash crunches. Go explore the unlisted trading world.