In a world where investors are constantly searching for an edge beyond traditional equities, fixed income, or even mutual funds, unlisted shares have quietly emerged as an exciting frontier. These are shares of companies not listed on any stock exchange but available for purchase in the private market. As Indian investors grow more sophisticated, the allure of startups, emerging businesses, and strategic unlisted subsidiaries has never been stronger.
But should you include unlisted shares in your portfolio? Let’s break it down.
What Are Unlisted Shares?
Unlisted shares are equity instruments of companies that are not traded on public stock exchanges like NSE or BSE. These could include:
- Early-stage companies (e.g., Ola, PharmEasy)
- Subsidiaries of listed companies (e.g., HDB Financial, Tata Technologies before IPO)
- Strategic investments from holding companies
You can purchase them through private placements, intermediaries, or specialized platforms.
Why Consider Unlisted Shares?
- Early Mover Advantage
Unlisted shares provide access to companies before they go public at a stage when valuations can be significantly lower than post-listing levels. - Diversification
They move differently than listed equities, helping lower your overall portfolio correlation. - Long-Term Value Creation
Many unlisted companies grow at a rapid pace, especially in emerging sectors like fintech, electric vehicles, or digital health. - Limited Institutional Participation
Because of limited liquidity and access, these are often under-researched—creating potential opportunities for retail investors who do their homework.\
Risks You Shouldn’t Ignore
While the upside potential is high, unlisted shares come with unique challenges:
- Low Liquidity: Exiting your position isn’t always easy or immediate.
- Valuation Transparency: Pricing is not market-determined and can vary by seller.
- Regulatory and Tax Complexities: STCG and LTCG norms differ from listed equity.
- Corporate Governance: Lack of SEBI-mandated disclosures can make due diligence tougher.
Hence, unlisted shares suit informed investors with a long-term horizon and risk appetite.
How Much Should You Allocate?
There’s no one-size-fits-all answer, but here’s a general rule:
Allocate 5–15% of your equity portfolio to unlisted shares, depending on your risk tolerance, liquidity needs, and investment horizon.
Think of it like your “high-conviction, high-risk” bucket—complementary to your listed stock or mutual fund core.
Real-World Trends: Growing Appetite for Unlisted Shares
India is seeing growing participation in the unlisted markets, driven by:
- Anticipation of high-profile IPOs
- Sophisticated platforms facilitating unlisted investing
- Strong interest in companies like Reliance Retail, Tata Capital, and NSDL before their IPOs
Even family offices and HNIs are actively seeking exposure, treating unlisted equity as part of their alternative investments play.
So, Where Can You Start?
Navigating the unlisted space requires access, expertise, and a trusted partner who can help you with due diligence, valuation insights, and liquidity options.
That’s where InCred Money comes in.
Whether you’re a seasoned investor or exploring this space for the first time, InCred Money helps you make informed decisions in the unlisted market.
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