How to Buy Shares of Companies Even Before IPO; Check Details
Sushmita Goswami | Apr 19, 2022 |
How to Buy Shares of Companies Even Before IPO; Check Details
You can invest in a private company by buying unlisted shares even before the IPO comes. The biggest reason for investing in such stocks is the potential for strong returns. In fact, companies sell such shares at a discounted price to attract investors. Unlisted shares are likely to rise in price if the IPO comes up and is successful, resulting in substantial profits for the investors.
If you also want to buy unlisted shares then you must have a demat account. The transfer of such shares is done online only. This is done to ensure transparency, protect the interests of investors and ensure governance in the corporate sector. Abhishek Bhatt, Managing Partner, Amplify Capitals explains to you 5 ways in which you can buy unlisted shares.
The shares of startups are bought and sold on their website. A minimum investment of Rs 50,000 has to be made in such shares. Shares will be credited three days after payment.
In the early stages of business growth, most private companies offer Stock Ownership Plans (ESOPs) to retain employees and create a feeling of being a part of the company. Unlisted shares can be purchased from such employees.
Promoters have a major stake in every company. You can buy unlisted shares from them through private placement. Through private placement, promoters can sell their shares to specific people or a select group. Such investors cater to the specific needs of the promoters.
Financial institutions generally manage investments in unlisted stocks. They invest in a large number of unlisted stocks, as the price is low. Investors looking to get strong returns by taking more risk can buy unlisted shares from such institutions.
Most startups raise capital through crowdfunding. In this, a large group of investors together buy unlisted shares. With this, a large amount of capital is arranged at once. This is the reason why crowdfunding is very popular among startups.
It is important to check the valuation of the company before investing in unlisted shares. The risk is high, so this investment is not for investors with low risk profile. Invest in unlisted stocks only if you have huge capital, which you want to invest in risky assets and earn huge profits in the long run. Also keep in mind that the IPO of the company you are investing in may not come. High commissions are associated with such transactions and the company may even disappear.
In case of any Doubt regarding Membership you can mail us at [email protected]
Join Studycafe's WhatsApp Group or Telegram Channel for Latest Updates on Government Job, Sarkari Naukri, Private Jobs, Income Tax, GST, Companies Act, Judgements and CA, CS, ICWA, and MUCH MORE!"
