Partner With Us NRI

Open Free Demat Account Online with ICICIDIRECT

Buying Unlisted Shares of Pre IPO Companies


You can invest in a private company even before its initial public offer (IPO) by buying its unlisted shares. One of the main reasons investors buy these shares is for the expected gains. Companies sell these shares at a discounted price to tempt investors to buy a significant stake of their unlisted shares. The price of these shares then has the probability of increasing during the IPO, fetching the investors a good profit.

Anyone who wants to acquire unlisted shares must have a demat account since the transfer of these shares is only done online. That is to ensure transparency, investor protection and governance in the corporate sector.

Let us looks at how to buy these unlisted shares.

·  Through intermediaries and startups

Most startups provide the option to buy unlisted shares online. The buying and selling take place on their website. You need a minimum of Rs.50,000 to invest. The shares will be delivered to you three days after the payment.

·  From employees of the company

At the early stages of growth, most private companies offer their employees stock ownership plans (ESOPs) to retain them and provide a sense of ownership. These are also unlisted shares and can be bought from the employees.

·  From promoters of the company

Most promoters have a stake in the company. You can buy shares from them through a process called private placement. That is where the promoters can sell their shares to a select group of individuals that meet specific requirements.

·  Through financial institutions

Financial institutions usually manage investments in unlisted shares. They invest in a large number of unlisted shares because the price of these shares is low. They expect the IPO share valuation to earn them a good profit when the company lists itself. Investing in unlisted shares through a financial institution is mainly done by an investor with huge capital and a high-risk profile.

·  Through crowdfunding platforms

Mostly followed in startups, this allows a large group of investors to join together and fund small businesses for a stake in their unlisted shares. They provide money to the startups in exchange for shares.


The rise in investing in unlisted shares is due to the idea of making huge profits once the stock lists. Still, you also need to check valuations and evaluate the risks before investing your money in these unlisted shares. Seasoned investors with high-risk profiles and high capital usually invest in unlisted shares because they can understand the financials of the company and the risks involved in greater detail.  Buying shares that aren’t listed comes with its own set of risks. There might be a chance of the IPO not taking place. There is also a very high commission rate involved in these transactions, plus there is a chance of companies vanishing with investors money. The volatility of the market also makes a long-term investment prone to high risks.


ICICI Securities Ltd.( I-Sec). Registered office of I-Sec is at ICICI Securities Ltd. - ICICI Centre, H. T. Parekh Marg, Churchgate, Mumbai - 400020, India, Tel No : 022 - 2288 2460, 022 - 2288 2470.  Please note, IPO related services are not Exchange traded products and I-Sec is acting as a distributor to solicit these products. All disputes with respect to the distribution activity, would not have access to Exchange investor redressal forum or Arbitration mechanism. The contents herein above shall not be considered as an invitation or persuasion to trade or invest.  I-Sec and affiliates accept no liabilities for any loss or damage of any kind arising out of any actions taken in reliance thereon. Investments in securities market are subject to market risks, read all the related documents carefully before investing. The contents herein mentioned are solely for informational and educational purpose.

Most Popular

  • 13 May 2022
  • ICICI Securities

The Five-Point Financial Planning Checklist For Your Family

Whether you just got married or planning to have a baby or have dependents, you should have financial plans for every stage in your life to ensure a secured future for your family members. Here are five things you can do financially for your family.   

  • 12 May 2022
  • ICICI Securities

What is a Zero Coupon Bond?

You get fixed returns in the form of interest until maturity when you invest in a bond. Zero-coupon bonds work a little differently. In this article, find out what zero-coupon bonds are, their advantages and whether you should invest in them. 

  • 12 May 2022
  • ICICI Securities

What are Cross Currency Pairs?

The forex market is the largest financial market globally. Currency trading is a lucrative and booming business. While most currencies trading happens in relation to the US Dollar, some don’t. That forms the basis of cross currency pairs. Here’s what you need to know about it. 

  • 12 May 2022
  • ICICI Securities

Investing principles from Benjamin Graham: The Father of Value Investing

Benjamin Graham was a British born economist, professor, and investor who taught at Columbia University. He was also a mentor to some of the most famous investors of the 20th century, including Irving Khan, John Templeton, & Warren Buffett. Buffett called him "the second most influential figure in his life, only after my father". 

  • 12 May 2022
  • ICICI Securities

How to Invest in Nifty 50?

The Nifty 50 is the benchmark index of the National Stock Exchange. It represents the 50 largest companies listed in India. Investing in the Nifty 50 can be a good idea for those looking to make index-linked returns. Here’s how you can invest in the index. 

  • 12 May 2022
  • ICICI Securities

Investment philosophy of Cathie Wood: The most powerful woman on Wall Street

Catherine Duddy Wood, also called Cathie Wood, is an investor who primarily invests in disruptive technologies and is the founder, chief executive officer, and chief investment officer of ARK Investment Management, LLC, an investment management firm mostly active in the United States.

  • 11 May 2022
  • ICICI Securities

How to Use Technology to Improve Your Finances

Technology has made life simpler for everyone. In the realm of personal finance, technology has streamlined many processes—from budgeting to automating your payments. On National Technology Day, let’s look at how technology has transformed our finances. 

  • 11 May 2022
  • ICICI Securities

How to Invest in your Every Goal with Mutual Funds?

Each of us is unique. We have different needs and goals in life. Some of us can ride along swinging markets, while some may need a relatively conservative investment tool. 

  • 11 May 2022
  • ICICI Securities

Four Reasons Why Entrepreneurs should Invest in Equity Mutual Funds

Equity mutual funds provide growth opportunities not just for individual investors but also for entrepreneurs and corporates. They make excellent investments for anyone looking for wealth creation. This article will give you four reasons why businesspeople should consider investing in equity mutual funds.