Investing in unlisted shares can feel like stepping into an exclusive club where the biggest market winners are often discovered before they go mainstream. But how do you get access, and what should you watch out for? This guide will break it down for you in an engaging and easy-to-follow way.
What Are Unlisted Shares?
Unlisted shares (also called private equity shares or pre-IPO shares) belong to companies that haven’t yet debuted on stock exchanges like the NSE or BSE.
Instead of trading publicly, these shares are bought and sold through private transactions, making them a unique but less liquid investment option.
Think of it like getting an early investment opportunity in a future market giant before it explodes in value!
For instance imagine the 2024 IPL auction—where the Rajasthan Royals signed 13-year-old batter Vaibhav Suryavanshi for ₹1.1 crore. A bold bet on raw talent, right?
That’s exactly how investing in unlisted shares works. You’re betting on a company’s future potential, hoping it becomes a market leader.
Why Invest in Unlisted Shares?
Unlisted shares offer some exciting advantages, but they also come with risks. Here’s why they attract investors:
The Big Draws:
- Early-Stage Growth Potential: Get in before the company goes public, potentially reaping massive returns.
- Exclusive Access to Private Companies: Invest in startups and firms that aren’t available on stock exchanges.
- Diversification: Balance your portfolio by mixing listed and unlisted stocks.
- Lower Valuations: Often, unlisted shares trade at a discount compared to their IPO price, creating an attractive entry point.
The Risks You Should Know:
- Liquidity Issues: Selling unlisted shares isn’t as easy as liquidating listed stocks.
- Price Transparency: No standard market price means valuation can be subjective.
- Regulatory Concerns: Unlike listed firms, unlisted companies don’t follow strict SEBI disclosure norms.
How to Invest in Unlisted Shares?
Now, let’s get into the exciting part—how you can buy unlisted shares in India. Here are your best options:
- Through Brokers & Intermediaries
Many brokerage firms specialize in buying and selling unlisted shares. They act as a middleman, helping you find sellers. - Buying ESOPs from Employees
Employees of private companies often sell their stock options (ESOPs) in secondary markets. This can be a great way to acquire unlisted shares. - Directly from Company Promoters
Some investors strike deals directly with company promoters to acquire a stake in their business. - Via PMS & AIF Schemes
Portfolio Management Services (PMS) and Alternative Investment Funds (AIF) invest in unlisted shares on behalf of clients.
Top Notable Unlisted Shares in 2025:
What is Grey Market Price/Premium (GMP)?
If you’ve ever heard investors discussing Grey Market Premium (GMP), here’s what it means: it’s the unofficial price at which an IPO’s shares trade before their official listing.
For example, if an IPO is priced at ₹500 and its GMP is ₹200, it means investors are already willing to pay ₹700 per share in the grey market.
However, while GMP can indicate demand, it’s not always a foolproof predictor of a stock’s performance post-listing.
Taxation on Unlisted Shares
Investing in unlisted shares can be rewarding, but it’s essential to understand the tax rules before making a move. The duration of your holding determines capital gain tax on unlisted shares:
- Long-Term Capital Gains (LTCG) – If you hold unlisted shares for more than 24 months, you’ll pay a 12.5% tax on gains.
- Short-Term Capital Gains (STCG) – If you sell within 24 months, your gains are taxed at 20%.
Knowing these tax implications can help you plan better and maximize returns.
Lock-In Period: Can You Sell Anytime?
When investing in unlisted shares, flexibility in selling is a key concern. Unlike listed stocks, which can be traded freely on the stock exchange, unlisted shares do not typically have a mandatory lock-in period. This means you can sell them at any time, depending on market demand and available buyers.
However, there’s an important exception: pre-IPO shares. If you invest in shares of a company before it goes public, the Securities and Exchange Board of India (SEBI) imposes a mandatory six-month lock-in period post-listing. This means that after the company’s shares get listed on the stock exchange, you must hold them for at least six months before you are allowed to sell.
Understanding these rules can help you plan your exit strategy wisely and avoid unexpected restrictions.
How to Track Unlisted Share Prices?
Tracking unlisted share prices isn’t as straightforward as checking stock market listings. Since these shares don’t trade on exchanges, their prices are driven by demand, company performance, and recent private transactions—making it tricky to find real-time values.
So, how do you keep up? There are dedicated platforms that help investors track unlisted shares, such as:
- Unlisted Zone – Gives you the latest buy/sell prices based on actual market activity.
- StockX – Provides estimated valuations by analyzing private market transactions.
These platforms provide real-time pricing based on investor demand and actual transactions.
Transferring Unlisted Shares via DIS (Delivery Instruction Slip)
Transferring unlisted shares isn’t as simple as selling listed stocks through a broker. Since these shares aren’t traded on stock exchanges, they must be transferred manually using a Delivery Instruction Slip (DIS). This process ensures that ownership is legally transferred between parties.
Here’s a step-by-step guide to transferring unlisted shares smoothly:
- Obtain a DIS Booklet – Get it from your Depository Participant (DP).
- Fill in the Details: ISIN number, DP ID, Client ID, and quantity of shares.
- Submit to DP – Your DP verifies and processes the transfer.
- Receive Confirmation – You’ll get an acknowledgement once the transfer is completed.
Final Thoughts: Should You Invest in Unlisted Shares?
Unlisted shares can be a game-changer for investors looking to tap into high-growth opportunities before they hit the public market. But with great potential comes great risk. That’s why having the right guidance is crucial. At Fintoo, we help you make informed decisions—from researching companies to managing risks and optimizing your investment strategy.
The market is evolving fast, and with the right approach, you could be holding the next big success story. Let an expert from Fintoo be your trusted partner in navigating the world of unlisted shares!
Disclaimer: The companies mentioned in the image or blog are for informational purposes only. These are not investment recommendations. Please conduct thorough research and seek expert guidance before making any investment decisions.
