What is unlisted market?
What is unlisted market?
The term “unlisted market” in India refers to the trading and investment activity that takes place in securities that are not listed on recognized stock exchanges such as the National Stock Exchange (NSE) or the Bombay Stock Exchange (BSE). In simple words, it encompasses the buying and selling of shares or securities of companies that have not gone through an initial public offering (IPO) and are not available for trading on the public stock exchanges.
The unlisted market provides a platform for investors to trade securities of private companies or companies that have not yet chosen to go public. These securities are typically traded through specialized brokers or online platforms that facilitate transactions between buyers and sellers.
Few top known company in unlisted market:
- Chennai Super Kings (CSK)
- Studds Accessories
- National Stock Exchange (NSE)
- Own Your Room (OYO)
- Boat
- HDB Financial Services
- B9 Beverages (Bira Beer)
- Reliance retails
- Tata Technologies
- Hexaware Technologies
Advantages of Unlisted Stock Market:
- Access to Early-stage Companies: The unlisted stock market provides an opportunity to invest in early-stage companies or start-ups that have not yet gone public. This allows investors to potentially participate in the early growth and success of these companies.
- Potential for Higher Returns: Investing in unlisted stocks can offer the potential for higher returns compared to listed stocks. If a company performs well and eventually goes public or gets acquired, the value of its shares may increase significantly, resulting in substantial returns for early investors.
- Diversification: Investing in the unlisted market can be a way to diversify an investment portfolio. It provides exposure to different sectors and companies that may not be available in the traditional listed market.
Can Unlisted Company come with an IPO?
Yes, an unlisted market company can choose to go public through an Initial Public Offering (IPO). Going public through an IPO allows the company to list its shares on a recognized stock exchange and offer them to the general public for trading.
When a company decides to go public, it typically hires investment banks and other financial institutions to manage the IPO process. These institutions help the company with various tasks such as conducting due diligence, determining the offer price, preparing the necessary documentation, and marketing the offering to potential investors.
During the IPO, the company issues new shares to the public and existing shareholders, such as early investors or employees, may also have the opportunity to sell their shares. The company raises capital by selling its shares to investors, and in return, the investors become shareholders of the company.
