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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.
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.
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:
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.
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.
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 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:
NAV=Sum of all tangible assets with current market value - Sum of all tangible liabilities with current market value.
NAV=Sum of all tangible & intangible assets with current market value - Sum of all tangible & intangible liabilities with current market value.
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.
Here is a step-by-step process and how we can help you buy 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.
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.
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.
We can help you with your portfolios by managing your investments and assisting you in the buying and selling of shares.
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:
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.
We find out a suitable buyer for you and once you accept the trade we move on to the next step.
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.
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.
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 are a type of company shares that are available to purchase before going to list-en public. These shares provide an opportunity for investors to buy at a very low price before it is listed publicly.
As any IPO is going to be listed in the open market, multiple applications are submitted which decreases the allocation chances, but if you already purchased pre-IPO shares you can skip the allocation part and can expect huge returns from them.
You can easily purchase pre-IPO shares, on any OTC (over-the-counter platforms), one of the most famous OTC platforms is Sharecart.com, they offer excellent services and unbiased advice.
Before purchasing any pre-IPO shares, you must be familiar with the company's balance sheets, last quarter's performances, EBETA, future road map and much more. If all these things are growing, you can expect a huge return from that.
If your holding period of unlisted shares is more than 24 months, you will be charged 10% of the LTCG tax rate, upon the selling of these shares.
Since there is a six-month lock-in period for pre-IPO shares, that means you can only sell these shares after six months of IPO listing.
There are several platforms available in the open market but, sharecart.com is the best platform to trade as they have the market's best screeners and tools which offer deep insights into any stock before investing.
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.
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.
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.