How To Buy Unlisted Shares

Many investors and ordinary citizens have been buying shares of unlisted companies and have gained multifold returns from it. One can invest in unlisted shares to diversify their portfolio and in doing so they can reduce the risk occurring from investing in the same type of investing instrument.

If you are someone who wants to invest in unlisted shares, we bring to you everything you should know about unlisted shares and the process involved in buying of the shares. 

Trading Platform And It’s Liquidity

The first and foremost thing that would cross one’s mind before buying unlisted shares is where is it traded and can it be liquidated easily? As we all know unlisted shares cannot be traded on the stock exchange as they are not listed on it. These shares are traded on the over-the-counter marketplace and can be bought and sold easily through any trusted dealer such as stocx.in. The shares can be easily liquidated if you know the process and a trusted platform or dealer in the market.

Advantages Of Buying Unlisted Shares

There are various reasons why one should invest in unlisted companies, the following are a few reasons why you should invest in these companies:

Earn Proliferating Profits

The returns on investment are the primary factor that causes both professional investors and regular people to consider making an investment in an unlisted company. You can earn multi-bagger profits if you invest at the proper time and choose the company after completing extensive research.

Better Value For Money

Unlisted shares are sold at a reduced price by the company because it is through this that the company raises  and since it is unsure of how it will fare after the IPO, it sells its shares at a lower price. Investors benefit from this since they can buy the shares at a reduced cost.

Price Bargaining

Unlisted shares may be priced differently since there aren't enough buyers and sellers to go around. Therefore, a shareholder may speak with the broker directly if they wish to buy shares at a price other than the one disclosed to them.

Reduced Stress

Investing in unlisted shares can be less stressful than investing in public shares because of the lower standard deviation rate. There is no need to be concerned about daily price fluctuations in unlisted shares.

Diversification of Portfolio

Listed and unlisted shares complement one another well.

Pre-IPO stock purchases help diversify a portfolio while lowering risk. The stock market listing would provide the company's investors the advantage if it decides to go public.

Disadvantages And Risk Of Buying Unlisted Shares

No Assurance Of IPO

Investors who come to invest in unlisted companies anticipate that those companies will choose to become public sooner or later. However, one factor that is overlooked is the fact that there is no guarantee that a firm will choose to get listed. The choice is up to the business, they may decide against an IPO if they believe that it would not be advantageous.

Pre-IPO Shares are Less Liquid

These shares are not very easy to deal in unless you know a reliable broker or dealer who invests in unlisted shares because so few investors choose to make long-term investments.

Hard To Track Share Prices

There is no daily fair market price for these companies because they are not listed on any exchange, thus a fair value must be determined.

The information on unlisted companies is not freely available everywhere, only a few platforms like stocx offer you detailed information to keep you updated.

Best Practices To Keep In Mind

Avoid investing on suggested shares

It is absolutely essential not to indulge in buying unlisted shares just by listening to suggestions from people and loved ones. Research is essential if you are looking to buy unlisted shares. People may suggest any company but it doesn’t have to be right. Before buying unlisted shares or any shares for that matter, It is important to do thorough research.

Study the company's operations

It is important to do an in-depth study on the company you want to invest in. It is advised to discover the management's long-term goals for the business and examine the company's income sources, revenue mix, and cash flow risk. It is necessary to evaluate the value proposition of the company and assess its advantage over competitors in the sector.

Opt For Futuristic Company

It is advised to examine the business's expansion strategies and funding sources.Examine the company's plan to expand and evaluate the prospects for the future. Unlisted shares gives you an option to choose from startups that have the potential to fare well in the future and bring in good returns.

Know about the company’s market standing

Knowing where the company stands in the market and amongst the competitors will give you a fair idea if the company is good enough to invest in. You can also check if other big investors are investing in the particular company or not or if it is backed by a successful company or promoter.

Conclusion

When you understand the process, buying unlisted shares is not that difficult. You won't need to worry about anything with Stocx. If you are satisfied with the buyer we have found for your shares, Stocx will proceed with the trade. We work to make your interaction with us as enjoyable and hassle-free as we can.

Any questions you may have will be answered by our knowledgeable staff, who will also guide you through each step of the procedure.