Almost every kind of investment has facts and information that you must know before trying out your hand on it. Building on that, here, we’re going to take a look at the concept, trading process, market functionality, and characteristics about unlisted shares in detail. Let’s dive right in.
What are Unlisted Shares?
Generally, Unlisted Equity is shares of Public/ Non Public limited or private companies that are not listed on any exchange.
Unlisted stocks are usually classified under two segments.
- of Listed or MNCs like Tata Technology, HDB Financials, Metropolitan Stock Exchanges, etc
- New-age companies like JIO, Paytm, Bira Beer, Pharm Easy, Policy Bazaar, Zomato, etc.
Concept of Unlisted Shares and Why Seasoned Investors are Interested in Them!
The opportunity and size of unlisted companies far exceed the listed companies.
Some of the new age unlisted companies are disruptive in nature and the business model revolves around product model or business model innovation.
For example, companies like OLA – Paytm – Pharm Easy – Care Insurance – Root Multi clean…
The prospect to leap your investments is much higher with equivalent risk. 2021 itself has seen over 8 companies becoming unicorns in India.
Another good reason to explore unlisted investment is that some of the companies are subsidiaries of listed companies and these unlisted companies are able to disrupt and explore the uncharted territory. For example, HDB Financials, Tata Technology, Chennai Super King(IPL Franchise)
Things to Know Before You Invest in Unlisted Shares
Opportunities
As mentioned previously, the flexible mode of working and regulations of these relatively new-age, novice business firms can generate huge profit for the shareholders if success comes along. Moreover, these companies in the future might get listed, and then the shareholders would be able to enjoy the perks just as a listed company’s shareholders do.
Growth Potential
Unlisted shares are like wet clay – there is a huge potential for growth in these shares and that is why seasoned investors consider these as hidden gems. But you must be mentally prepared to take some calculated risks if you want to win the game of unlisted shares.
Liquidity
These shares are not as liquid as the listed stocks- however, there is some liquidity that is available 24/7 across 365 days, and with the help of NSDL and round-the-clock RTGS, the liquidity is much better than the listed market.
Trade settlement.
Listed stocks trade settlement takes T+2 days to settle the trade. However. Unlisted trade stocks settlement can be done in as low as 2 minutes.
Risk
Unlisted companies’ risks are as good as the risk in listed companies in terms of business and systematic risk.
Rurash Financials helps the investors with some due diligence on the underlying risk in unlisted companies.
Diversification
The unlisted new-age companies offer you some diversification in terms of business risk. For example, there is no listed company to invest in helmet manufacturing, payment wallet, or medicine aggregator. However, Unlisted companies offer you to invest in companies like Zomato, Policy Bazaar, Pharm easy, Studds accessories.
Annuity Income
Some of the unlisted companies are paying very good dividends. As high as 9% dividend.
Conclusion
Unlisted shares offer variety along with an option to invest in new-age companies that not only protect your wealth but also magnify your returns.
Companies like Rurash Financials provide the platform to invest in unlisted companies.