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What Are Pre-IPO Shares?

Pre-IPO shares are the shares issued by a company before it signs the Initial Public Offering to get listed on the stock exchange of India. Pre-IPO companies are often young and in their growing stage, for them to get listed under the stock exchange, they need to comply with certain guidelines and eligibility requirements such as market capitalisation, company size, listing fee, etc. Pre-IPO companies are companies that are either planning to go public in the near future or will eventually go public but would take time.

The main reason for investors to buy shares from pre-IPO companies is because of the expected profits. Investors tend to buy shares from pre-IPO companies as they sell their shares to investors at a lower or discounted price. When these companies get listed, the investors get significant profit from it.

TYPES OF UNLISTED SHARES

Where Are Pre-IPO Shares Traded?

Pre-IPO shares, unlike listed shares, cannot be traded on the stock exchange. So then, the question that arises is, where are these shares traded? These shares are traded on the over-the-counter market and are thus also known as over-the-counter securities.

How Are Pre-IPO Shares Valued?

Since pre-IPO shares do not come under the stock exchange, they do not have an actual price set on them. There are various ways by which the prices of these shares can be evaluated as no particular method would be apt for the valuation of all shares. Here are a few methods by which the prices of pre-IPO shares are evaluated:

  • Book Value Method

    Under this method, the company's tangible assets and liabilities are taken into account. It is essential to check that the company's assets and liabilities are revalued annually and are fair.
    Book Value=Sum of all tangible assets - Sum of all tangible liabilities.

  • Last Transaction Price Method

    In this method, as the name suggests, the last price at which the pre-IPO share was traded is taken into consideration. Generally, this method is not used as the price at which the previous trade took place doesn’t necessarily have to be apt for the current trade, prices of the shares can be overvalued or undervalued.

  • Price To Earning Ratio Or Discounted Cash Flow Method

    It is one of the most used methods but only applies to companies with stable business operations as recent earnings are accounted for to anticipate the future cash flow. Once that is predicted, you have to discount these future cash flows with a discount rate. This rate can be derived from the same sector, under the listed companies on the stock exchange.

  • Net Asset Value (NAV)

    Net asset value is similar to the book value method only difference is that net asset value is calculated based on the current price in the share market, whereas book value uses previous prices. Net asset value can be estimated using two methods:

    • Only Including Tangible Assets

      NAV=Sum of all tangible assets with current market value - Sum of all tangible liabilities with current market value.

    • Including Both Tangible & Intangible Assets

      NAV=Sum of all tangible & intangible assets with current market value - Sum of all tangible & intangible liabilities with current market value.

How Can We Assist You?

If you are an investor or a shareholder looking to buy or sell pre-IPO stocks, you have come to the right place. With us, you don't need to worry about anything. We do thorough research on a company before listing it here for you to invest in. Our expert team will help you clear any doubt that you may have and assist you in every step of the process.

Buying Of Pre-IPO Shares From Sharescart

Here is a step-by-step process and how we can help you buy your desired shares.

Step-1 Choose Your Desired Shares

You can scan through the companies and decide which company to invest in. Once done, you can tell our team about the desired investment.

Step 2 - Payment To Sharescart

Our team will share the account details so that you can transfer the trade amount into our account. We will notify you about the document needed beforehand.

Step 3 - Delivery From Sharescart

The shares will reflect in your Demat account within 24 hours, depending on the holidays. Our details would be available to you before the transfer.

Step 4 - Portfolio Management

We can help you with your portfolios by managing your investments and assisting you in the buying and selling of shares.

Selling Of Pre-IPO Shares To Sharescart

Want to sell your shares, just let us know the details and we will find out a suitable buyer according to your selling needs. Here are a few quick and easy steps involved:

Step 1 - Equity Details

To help you better we would require a few details related to the shares you want to sell and the price at which you want to sell them.

Step 2 - Affirmation Of Demand

We find out a suitable buyer for you and once you accept the trade we move on to the next step.

Step 4 - Transfer Of Shares To Sharescart

The account details would be provided to you for the transfer of shares. We will notify you about the details needed for the trade beforehand.

Step 5 - Get Payment From Sharescart

Once the transfer is complete, the payment would be transmitted to your account within 24 hours, depending on the holidays.

Buying and selling of shares can never get smoother than with Sharescart. We will help you buy the shares you desire as well as sell shares as per your request. Our team works tirelessly to fulfil your needs, to guide and assist you in every step of this shared journey.

For any queries or more information, please feel free to contact us. We would be happy to assist you.

WHY Sharescart?

If you are looking to buy or sell stocks, you have come to the right place. With us, you don't need to worry about anything. We do thorough research on a company before listing it here for you to invest in. Our expert team will help you clear any doubt that you may have and assist you in every step of the process.

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Pre-IPO Shares: Frequently Asked Questions

Why should I trade in pre-IPO companies?

Pre-IPO companies are companies in their growing stage and planning to go public in the future. The major reason to invest in pre-IPO companies is because of the proliferating profits one would get once the company goes public. People invest in pre-IPO shares as share prices of companies in their pre-IPO stage are comparatively lower and it is difficult to get shares of a company after they get listed.

Will I definitely get a profit if I invest in pre-IPO companies?

Nothing is certain, the same rule applies here. No one can give someone the assurance that a particular company’s share will definitely earn you profits once the company goes public. The same rule applies to companies listed on stock exchanges as well.

What will happen to my shares if a company decides not to go public after planning on it?

Your shares will be safe no matter what, you can either decide to sell the shares if you want or keep them with you and wait for a better market price for the share before you sell them to gain profit. There might even be a possibility that the company has decided to go public at a later date.

CUSTOMER REVIEWS

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Ramesh Kumar

Chennai

May 17, 2022

The company was quick in responding to queries and assisted me with the selling of my shares, I received the payment within 3 hours even though the time that was given was 24 hours. I am quite happy with the services provided and would consult them for buying and selling of shares.

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Vidya

Noida

June 05, 2022

My experience with Sharescart was terrific. I was a bit skeptical about contacting them before but when I did, I got superb services. The team was very friendly and explained everything in detail.

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Vicky Singh

Agra

May 29, 2022

I am a new investor in the unlisted stock market and had a lot of doubts, I came to this website because my friends suggested it. I am elated with the response I got, they were very patient with me and answered all of my queries. I am now confident that with their help I can invest in unlisted shares. Thank you Sharescart.

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Pawan Kumar

Gurgaon

April 26, 2022

3 months back I bought shares through Sharescart at a price of Rs.50 per share and after 2 months they contacted me that the share prices have risen and are now at Rs.60 per share. I am glad to have invested in the company. Thank you Sharescart for your advice and updates.

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Pardeep

Delhi

January 26, 2022

I wanted to invest in unlisted shares, I had told the Sharescart team about the company I wanted to invest in and they were happy to help me buy the shares but they also advised me not to invest the entire amount in one company and put it in 2-3 companies to reduce the risk factor in case I incur a loss. I loved the opinion and immediately divided the amount into three companies.