The pre IPO market has become the new favorite of the elite investors in India, however, with the help of a financial advisor or through some inside source, even a regular investor can also buy unlisted shares in India. In this blog, I will share some of the major reasons why pre IPO shares are leading in the market.
One certain way of making a profit in this form of investment is by going in early. Many of the companies offering pre IPO shares allow their investors to buy unlisted shares in India even 18 months before being listed in the market. During this early phase, the price of the shares is quite low and thus these shares have the potential to generate huge profits for the investors.
The avenues to buy pre IPO shares are rising in India. The IIFL group became the first fund that is dedicated to pre IPO; on the other hand, Centrum uses Alternative Investment Fund (AIF) for the unlisted shares. Last year, IFFL AMC, which is a part of IIFL investment managers launched a fund last year that was specially dedicated to the pre IPO shares. The lower limit for investment in this fund was INR 1 crore and till now it has collected around INR 4,500 crore.
The number of high quality IPOs that are entering the market has increased to a large extent. This has created great investment opportunities in the market. Sure enough, for making a profit through this route, the investors have to make informed decisions. That is, you should invest in the companies with whose potential you are well-aware of. Financial investors recommend buying unlisted shares in India of the companies that have huge upside potential. Some of the companies that have proven to have high upside potential are insurance-based and tech-based companies. For instance, the pre IPO shares of the ICICI Lombard General Insurance were available at INR 460/share, and they are expected to list at a much higher rate. Similar is the case with Reliance Nippon Life Asset Management. The firms and individuals who invested in these companies are expected to make huge profits. As already mentioned, investors have a number of opportunities to buy such profitable unlisted shares in India and it is one of the major reason for the lead of pre IPO shares in the market.
The elite investors have noted this trend and consequently, they have made pre IPO shares a new investment avenue. The fund managers too have not failed to notice this trend, however, a majority of them buy pre IPO shares from the private equity investors. These private equity investors are ready to sell their shares since they have already gained huge profits out of their investment.
A number of investors who have had enough of investment in startups are moving towards such investment. This increasing attention towards the pre IPO market is the reason why it is growing with such huge pace and is on the verge of becoming the leading investment avenue in the market.