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THE ULTIMATE GUIDE TO BUYING UNLISTED SHARES SAFELY IN INDIA—NEVER BUY
OVERPRICED SHARES


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TABLE OF CONTENTS



 1. But First, What’s The Difference Between Listed & Unlisted Shares
 2. Unlisted Financial Instruments: What Are They?
 3. What is the best way to invest in unlisted companies?
    1. Investing in new businesses and intermediaries
    2. Buying stocks directly from promoters
    3. Buying ESOPs directly from employees
    4. Invest in PMS and AIF funds that buy unlisted stocks.
 4. While investing in unlisted shares can be advantageous, it also carries a
    high level of risk. The risks of buying unlisted shares are as follows:
 5. Wanna Know How You Can Avoid Buying Overpriced Unlisted Shares? Read on.
    1. First, The Basics
    2. Factors That Affect The Price Of Unlisted Shares
    3. Follow The Money
    4. Keep An Eye On The Competition
    5. Good Vs Excellent
    6. Leadership From The Roots
 6. The right financial advice before investing in unlisted shares is essential.
 7. Leave a Reply Cancel reply


THE ULTIMATE GUIDE TO BUYING UNLISTED SHARES SAFELY IN INDIA – HOW TO BUY
UNLISTED SHARES IN INDIA

If you’re nervous about investing in unlisted shares, don’t worry! We have a few
game-changing tips to help protect you from booking unnecessary losses.


BUT FIRST, WHAT’S THE DIFFERENCE BETWEEN LISTED & UNLISTED SHARES



There are two types of shares that you can buy on the stock market: Listed and
Unlisted. The listed stocks come with a safety net through constant monitoring
by SEBI, while unlisted ones provide opportunities for growth but also carry
risks not seen before like lesser regulations. 

If such high-growing opportunities pique your interest, this blog will help you
understand how to buy unlisted shares of a company.

Unlisted shares, also known as over-the-counter (OTC) securities, are any
security or financial instrument that is available for trade on over-the-counter
markets.

Unlisted companies like CSK, BYJU’s often have to go through a lot more than
their listed counterparts. 

They can’t just list themselves on some stock exchange and be done with it –
they need requirements like listing fees, as well as meet minimum market
capitalization standards set by law.


UNLISTED FINANCIAL INSTRUMENTS: WHAT ARE THEY?



The common stock is one of the most prevalent types of unlisted financial
instruments. These stocks are traded on OTC markets, which means they’re not
publicly listed for anyone to invest in. 

Among the other instruments are:

 * Penny stocks
 * Corporate bonds
 * Government securities
 * Derivative products like swaps, etc.


WHAT IS THE BEST WAY TO INVEST IN UNLISTED COMPANIES?

You can invest in stocks of some of India’s top unlisted companies like BYJU’s,
CSK, and Reliance Retail Limited in a variety of ways. 

Among the most popular methods are:


INVESTING IN NEW BUSINESSES AND INTERMEDIARIES

The shares of a pre-IPO company are delivered to your Demat account the moment
you buy them, even if that transaction happened off-the-record and without any
involvement from an exchange.

When dealing with an intermediary, the most important thing to keep in mind is
that they should be able to successfully help you close your transaction while
avoiding any counterparty risks.

Alternatively, you can invest in unlisted start-ups with the potential for
multi-fold growth in the future. These companies may be off the radar right now,
but they have the potential to bring profits and growth in the future. The
minimum investment amount in most start-ups is around Rs 50,000 to get the
stocks transferred into your Demat account.


BUYING STOCKS DIRECTLY FROM PROMOTERS

To invest a significant stake in a company, contact a reputable investment bank,
wealth manager, or broker who can teach you how to calculate the share price of
an unlisted company. 

Furthermore, they will assist you in directly connecting with the company’s
promoters and will introduce you to a list of unlisted companies in India.


BUYING ESOPS DIRECTLY FROM EMPLOYEES

The share purchase plan is one way to invest in India’s top unlisted companies.
Some brokers connect you with employees of organizations who sell their shares
at a predetermined price after a set period of time, this method can be used by
anyone looking for an easy way into these valuable assets.


INVEST IN PMS AND AIF FUNDS THAT BUY UNLISTED STOCKS.

Portfolio management systems, also known as PMSs are professionally managed
investment portfolios that optimize their investor’s returns through changes in
weight and composition based on market trends.

You can benefit from investing in unlisted shares in India through PMS schemes
that include unlisted shares in their investment strategy. This is far more
secure than direct purchase because:

1) You can spread the risk across the portfolio’s components.

2) The portfolio manager removes and adds stocks based on their performance in
real-time.


WHILE INVESTING IN UNLISTED SHARES CAN BE ADVANTAGEOUS, IT ALSO CARRIES A HIGH
LEVEL OF RISK. THE RISKS OF BUYING UNLISTED SHARES ARE AS FOLLOWS:

1) Liquidity

2) Capital loss

3) It is possible that dividends will not be paid.

4) Dilution risk


WANNA KNOW HOW YOU CAN AVOID BUYING OVERPRICED UNLISTED SHARES? READ ON.


FIRST, THE BASICS

Unlike publicly traded stocks, private companies’ shares are not displayed on a
stock exchange and instead trade exclusively through brokers.


FACTORS THAT AFFECT THE PRICE OF UNLISTED SHARES

Factors that affect the pricing of unlisted shares include supply and demand,
the transactions on a similar stock (particularly recent ones), the funding
round last conducted by the company in question, as well as their valuation
level relative to other companies like them.


FOLLOW THE MONEY

The first thing you can do to minimize your risk as an investor is to invest
only in profitable companies. 

This will require a level of patients that not all investors have, but it’s
important for those who want long-term success because these types of businesses
need time before they start turning profit again.


KEEP AN EYE ON THE COMPETITION

The economic moat or competitive strength of a company is an important factor to
analyze when investing in its IPO. If there are no other companies within that
niche that offer similar services, then this might be something you want for
yourself.


GOOD VS EXCELLENT

In order to invest wisely, one must know the difference between a good
opportunity and an excellent one. The key factor in deciding which investments
are worth your time is how much of their cash will go towards funding new
companies or projects? 

Investors should only invest in public issues involving fresh issuance of equity
where the significant percentage goes directly to their company.

If the proposed listing is only an ‘offer for sale’ with the intent to provide
an exit to existing investors, then the company does not receive any money from
such listing.

This means that there’s less potential growth and new blood entering into the
business-which can lead down dangerous paths if left unchecked.


LEADERSHIP FROM THE ROOTS

The data on the shareholding of founders in companies that got listed recently
shows a clear trend. The higher the ownership percentage by them, the more
likely they are to have an orientation towards long-term success for their
company. 

The shareholding of founders that got listed recently are: 

 * Nykaa (47%)
 * Sigachi (64%)
 * Paytm (9.6%)

When a company has strong founders, it is more likely to succeed. Company
ownership can be higher in companies with excellent management and a good vision
for their future growth because these individuals know how important the venture
really could become. 

In Essence

The potential for unlisted shares is unlimited and if done right, they can
create generation-lasting wealth. So, make sure you do your research before
buying unlisted shares.




THE RIGHT FINANCIAL ADVICE BEFORE INVESTING IN UNLISTED SHARES IS ESSENTIAL.

Make wise investment decisions and consult with an experienced, trusted wealth
manager today!




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DISCLAIMER

Investment opportunities posted on this website are ’private placements’ of
securities that are not publicly traded, are subject to holding period
requirements, and are intended for investors who do not need a liquid investment
within a year after the said securities get listed. Please note that investing
in private companies may be considered highly speculative and involves a high
degree of risk, including the risk of substantial loss of investment. See our
Risk Disclosure for a more detailed explanation of the risks involved by finding
investments through Unlistedkart platform.

Unlistedkart.com is a website operated by Unlistedkart LLP. (“Unlistedkart”). By
accessing this site and any pages thereof, you agree to be bound by our Legal &
Compliance, Risk Disclosure, Terms & Conditions , Privacy

Unlistedkart.com is intended/recommended only for investment from investors (for
persons residing in India/overseas), and for persons residing abroad in
jurisdictions where securities registration exemptions apply.

Unlistedkart is NOT a SEBI recommended or recommended by any other governing
entity in India or Overseas. Any trading symbols displayed are for illustrative
purposes only and are not intended to portray recommendations.

The risk of loss in online trading of stocks, bonds, equities (domestic &
foreign), and any assets on this platform can be substantial.Assets shown on
this platform involve risk and are not suitable for all investors. For more
information read Legal & Compliance, Risk Disclosure, Terms & Conditions,
Privacy . Before investing, clients must read the relevant risk disclosure
statements on our Risk Disclosure page.

Unlistedkart and logo are trademarks of Unlistedkart LLP. Other trademarks are
property of their respective owners. 



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