It is not uncommon to invest in the shares of listed companies like The SBI, Reliance, Amazon, etc. The authorities constantly monitor the shares of listed companies.
However, the shares of the unlisted companies present a better and more profitable deal for investments, but they come with all kinds of financial and security-related risks. The value of these unlisted shares can face a drastic rise and fall, making it difficult for investors to assess the profit and loss rate.
For example, according to a recent news report, the Lava share price experienced a considerable rise of 20%, whereas another company’s share price declined by about 40%. Several private companies choose to put their shares beyond the listed trading of the stock market as it entails profitable results for the companies.
There are many ways, through which one can invest in the unlisted shares of a company. Some of these ways are listed below:
Investing in the shares of start-ups
The transactions of unlisted shares investments usually happen offline through intermediaries. But the money does reflect in the investor’s account. It is most profitable to plan and invest in the budding unlisted companies because they are on the way to getting themselves listed. However, one should ensure that the intermediary and their proposed schemes are trustable and reliable.
Purchasing ESOPs from current employees
Purchasing ESOPs (Employee Stock Ownership Plan) from the employees is a direct and secure way of investing in a growing unlisted company. One can approach a broker to get necessary information about the share prices and employees of the unlisted company.
Seek a promoter’s assistance
Another way to invest in unlisted shares is by approaching an investment banker or a broker who can provide necessary information about the unlisted companies, their promoters who indulge in the promotions of the shares to retrieve more monetary profits, and the price of the shares.
Investing in PMSs
PMS or the Portfolio Management Systems dedicatedly manage investments portfolios according to market trends. Hence, it is wise to invest through the PMS’s launch schemes because it lessens the probability of risks and losses. The PMS actively tracks the fluctuations in share prices and changes the shares as per the profit rate of the unlisted company.
It is also essential to know that investing in unlisted shares invites many risks such as illiquidity and capital loss. One can only retrieve the payment when another buyer is ready or the company receives an IPO. If either of the two does not happen, then the capital is lost.
According to a recent report, the international share prices of many unlisted companies are rising as they are going to get their IPOs by the end of 2022, for example, API Holdings share price and Lava international share price, etc.
Hence, it is important to indulge in thorough research about the company, the source, medium or investment, profit and loss ratio, the information about tax, etc. Moreover, experts often advise that if one is planning to invest in unlisted shares, it is important that it is only the invested surplus money.
The unlisted shares are open to the risk of illiquidity, which means that the invested money is locked and unretrievable. It will prevent the investor from facing financial losses and plan their future investments more securely and profitably.