September 17, 2014 Leave a comment
If you’d like to be part of the action and excitement of various start-ups, you can consider investing in unlisted shares. But there are a few challenges to overcome and difficulties to bear up to.
Since these companies are unlisted, very little financial information is available. Also, because there’s no formal platform to trade these shares, the demand-supply situation varies and the price at which deals are struck are a function of the quantity, demand-supply situation and the sentiment prevailing in the secondary markets.
Unlike listed stocks, the unlisted space has few brokers and trades are made through known sources.Often, a broker accumulates small lots of shares from employees who have earned them as ESOPs, or from investors who have bought earlier and are looking for an exit. Once the broker has a sizeable chunk of shares, typically worth more than Rs 1 crore, it’s offered to HNIs.
Unlike listed shares, where a holder can exit through the stock exchange, liquidity is poor in unlisted companies. You would have to look for an IPO or another buyer. Read more of this post