In the financial market, there are several different kinds of investment portfolios to choose from. While most people limit their investments to smaller public stocks and safe recurring schemes; only the most skilled executives have the know how and daring to buy unlisted shares. India has thousands of up and coming enterprises which can be of great value once they go public. These range from ventures under big industrial giants and banks like TATA and HDFC; as well as smaller companies which have shown consistent growth and profit.
To buy pre IPO shares is much more challenging because they are long term investments which are yet to have much relatable data. It takes a very keen understanding of the market to analyze and estimate the future scope of a new company without much past. Though the returns are possible huge, and there are several other advantages for pre IPO stakeholders. This investment portfolio is only for the most capable business managers and exponents of finance. Only the experts who have the resources to gather in-depth data and information about new enterprises and their business can risk making these high volume investments.
One of the most interesting aspects about pre IPO shares in India is the presence of a lot of foreign investment. Since international investment trading is mostly done though LLPs and trading organizations; an unlisted company will have to make their work known to potential investors. Being new companies, there is not much market research available to analyze and speculate. This outreach is done through foreign investment LLPs which also provide them the initial platform and support needed before public release. In return, the investors can be involved in the administrative body of the company for life.
If you want to buy unlisted shares in India, you would have to first find a capable consultant who has the resources to provide you accurate market data. The companies need show healthy and consistent growth, and have to have a strong future prospect for you to receive good returns. Even companies attached to larger groups may have a slow growth, or not return expected percentages when it comes to pre IPO investments. This may be because of two primary reasons which are important to note –
(a) The company may be in an industry which has a lot of future scope and necessity like technology companies and scientific research enterprises
(b) They may be companies which are yet to reach major public recognition and popularity, but would rise rapidly once they have been publicly offered
One of the key reasons that people buy pre IPO shares is to catch on to a larger share of the profits; as well as have a certain degree of control on the directors and owners of a company. Once a brand goes public, it becomes self-organized. If investors want to be a part of the policy making body, they need to be involved well before the company has become of public interest. This is why there are only a handful of LLPs and agencies offering unlisted shares as an investment portfolio for the most cautious businesspersons.