High returns can be tempting, but unlisted shares come with their own set of unique risks. Here’s what to watch out for.
In the pursuit of high-growth opportunities, many investors are turning to unlisted shares securities of companies that are not yet publicly traded on stock exchanges. While these investments can offer pre-IPO potential and portfolio diversification, they also carry distinct risks that must not be overlooked.
A recent article by Money control rightly highlights the growing popularity of unlisted investments and the importance of investor awareness. At RURASH Financials, where we facilitate access to verified unlisted shares with professional advisory, we believe that informed investing is the only path to sustainable returns.
Let’s take a closer look at the key risks involved and how investors can mitigate them.
1. Liquidity Risk
Unlisted shares are not traded on regular exchanges, which means they can’t be bought or sold easily. The lack of a ready market may delay exit plans, especially during unfavorable market conditions.
RURASH View: We assist investors with a vetted network of counterparties and liquidity planning to ensure smoother exits when needed.
2. Valuation Uncertainty
Unlike listed stocks that have real-time market prices, unlisted shares are valued privately, often based on estimated financials or peer comparisons. This can lead to overvaluation or pricing mismatches.
RURASH View: Our due diligence includes access to audited financials, peer benchmarks, and proprietary valuation models.
3. Regulatory Oversight Is Limited
Since these companies are not under SEBI’s continuous disclosure norms like listed firms, there is limited regulatory monitoring. This can impact transparency, governance, and investor protection.
RURASH View: We work only with companies that demonstrate strong governance, clean compliance records, and credible management teams.
4. Information Asymmetry
Retail investors often have limited access to company insights, growth projections, or strategic plans. This asymmetry can lead to misinformed decisions or missed red flags.
RURASH View: Our team provides research-backed insights, verified documentation, and pre-investment briefings to bridge the gap.
5. No Price Discovery Mechanism
In the absence of open-market trading, price discovery in unlisted shares is opaque. This can result in disparities in pricing across platforms and sellers.
RURASH View: Our pricing is benchmarked using industry norms, historical trade data, and direct sourcing from promoters, employees, or institutions.
Why Investors Still Choose Unlisted Shares
Despite these risks, unlisted equity continues to attract savvy investors because of:
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Early access to pre-IPO growth stories
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Participation in India’s booming private enterprise sector
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Portfolio diversification beyond conventional assets
The key lies in partnering with a credible platform that ensures transparency, access to verified deals, and complete transaction support.
Final Thoughts
Unlisted shares offer an exciting investment frontier but they demand caution, clarity, and credible partnerships. At RURASH Financials, our aim is to empower investors with access, insight, and confidence when exploring this segment.