Why Do Companies Have Unlisted Shares?

Many companies, especially those preparing for an IPO, have shares that are held by a small group of shareholders. For instance, in the case of Tata Capital, a majority of shares are controlled by a handful of large shareholders, and the remainder by a much smaller group. Pre-IPO shares are often offered by these shareholders — such as former employees or angel investors — as the company prepares to go public.

How to Invest in Unlisted Shares?

There are platforms like Precise, where you can buy unlisted shares from as low as ₹10,000. These platforms make the process simple by providing you with access to detailed reports on companies and transparent pricing. Once you make a purchase, the shares are deposited into your demat account within 48 hours. One of the benefits of buying unlisted shares is the opportunity to get in early on high-growth companies that have yet to tap into the public market.

Gray Market: A Marketplace for Unlisted Shares

The gray market refers to a network of brokers and dealers who help facilitate transactions of unlisted shares. While the term "gray market" might sound dubious, it is important to note that trading unlisted shares is perfectly legal in India. The gray market is simply an unofficial, yet structured, way to buy and sell stocks before they are listed on the stock exchanges. Companies like Precise have emerged as platforms that organize these transactions and make them accessible to the general public.

Risks Involved in Trading Unlisted Shares

• Liquidity Risk: Unlike listed stocks, which have daily trading volumes, unlisted shares can be difficult to sell quickly.
• Price Volatility: The prices of unlisted shares are often more volatile due to limited market information.
• No Regulatory Oversight: Unlisted markets are less regulated compared to listed exchanges, increasing the risk of fraud or misinformation.