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What are unlisted shares?

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Bhavana
What are unlisted shares?

Unlisted shares are securities that are not listed in the stock market and that can be traded only in over-the-counter (OTC) markets, also known as OTC Securities. 

Typically unlisted shares are not traded on any stock exchanges. This happens because these smaller or new companies choose not to meet or cannot comply with specific requirements such as listing fees and market capitalization. 


Types of Unlisted Financial Instruments 


There are a few unlisted financial instruments, the most common being common stock. Other instruments include the following : 

  1. Penny Stocks 
  2. Corporate Bonds
  3. Government Securities
  4. Derivatives such as Swaps etc. 

How to invest in or buy Unlisted Securities


There are multiple ways to buy shares or invest in unlisted companies. Few of the popular methods are: 


  • Investing in Startups via a trusted Intermediary :


Pre-IPO companies are the ones who are presently unlisted, but they do intend to get listed in the future. You can easily invest in Pre-IPO companies, as the shares will come directly into the Demat account, despite trade happening off the record, without the involvement of any exchange. The only thing that requires attention here is a trusted intermediary, i.e. who can close your transactions wholly and successfully eliminate any counterparty risks. 


  • Buy ESOPs from Employees 


Brokers can often connect you with employees of certain companies who are willing to sell their shares after a certain vesting period. This works as one of the ways to buy shares of Major Unlisted companies in India. 


  • Take up PMS and AIF schemes that invest in Unlisted shares.


PMS or Portfolio Management Systems are professionally managed investment portfolios. The portfolio manager dynamically changes the portfolio’s composition depending upon the market trend to maximize investment returns. You can easily benefit from investing in unlisted shares in India through PMS schemes that pick unlisted shares as part of the investment strategy. This is better than direct purchase because:


  1. It can help you diversify your portfolio, thus reducing the risk.
  2. The manager will dynamically add or remove stocks based on their performance.

While there is immense growth potential, there might be a few risks associated, such as : 

  • Illiquidity 
  • Capital Loss
  • Dilution Risk 
  • Dividends may not be paid. 


Conclusion 

Unlisted shares hold immense potential for positive returns that is if you pick the right one. The returns can be exponential. The concern as mentioned stays in picking up the unlisted stock after careful consideration of the companies’ financials and a trusted intermediary. Rurash has been providing a wide range of unlisted shares of HDFC Securities, Studds Accessories, Suryoday SFB, Hero Fincorp, HDB Financial Services, Fino Paytech, Chennai Super Kings, One97 Communications (Paytm), and many more. Since trust and deep market expertise are critical in Unlisted Shares trading, you need a reliable intermediary for that. With Rurash, you can discover high growth opportunities with ease and stay updated with essential and relevant market intelligence. We help you make informed investment decisions. Transparency and compliance are the core principles of our execution. 

RURASH is one of India’s leading investment management firms, providing financial solutions to augment the client’s wealth and facilitating in building a purposeful legacy.



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