Food delivery firm Zomato’s shares were recently listed at a premium of 52 per cent. This initial public offer (IPO) was oversubscribed 38 times. In many IPOs that came this year, investors have got good returns on listing. However, a major problem is getting allotment of shares when a public offer is subscribed manifold.
Some investors buy shares even before the IPO. Many companies are preparing to bring IPO. However, making profit by buying their shares from the unlisted market is not easy.
When a company files documents for an IPO, the shares held by its existing investors and employees start increasing in price in the private market. For example, the share price of One97 Communications, which operates Paytm, is expected to rise to Rs 3,000. A year ago it was at Rs 1,500.
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Due to the rise in the stock market and the prospect of listing, the demand for the company’s shares has increased.
Shares of Care Health Insurance have also been in demand after reports of the company making a public offer. Its share is priced above Rs 230. Share prices in the unlisted market have high volatility and do not indicate true value.
How does trade happen?
Since these shares are not listed in the stock market, there is no market price for them. An estimate of the market price for these shares is given. Some wealth management firms help investors buy unlisted shares.
Portals like Analah Capital and Unlistedkart also make arrangements to buy such shares. “For large investors, shares can be arranged for a fixed fee. The price of unlisted shares often includes broker fees,” said Rupesh Nagda, Managing Director and Founder, Family First Capital. To buy these shares, the investor should have a demat account.
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