Unlisted shares belong to privately owned companies that have not yet gone through
the Initial Public offering (IPO) process.Unlisted Shares are the shares of Companies
which are not Listed on any Stock Exchange, hence they are not traded publicly.
Market makers facilitate the buying and selling of unlisted securities in the OTC
(over the counter) market.The main advantage of unlisted shares is that one gets
an opportunity to invest into companies which are fast growing and are potentially
the companies of future
An unlisted company can be either a completely new business or a subsidiary of a
listed company. A fair value of an unlisted share is arrived at by different market
participants like Brokers, Investors and Owners. One of the popular ways of valuing
an unlisted company is to compare it with a listed peer in the similar line of business
and price it accordingly.
Unlisted shares get available when the promoters either off-load a part of their
stake or if employees dilute their stock options or if big investors want to partially
or fully want to exit their stake. All this happens through private placement.
Private Equity which is also knows as buying and selling of stakes in the unlisted
companies is a very active space and there are many companies with billion-dollar
valuations which make investing into unlisted companies a very attractive proposition.
Generally, value unlocking in unlisted shares happen when companies get listed or
when there is large stake changes hands