Should retail investors buy IPO shares in the pre-market? main idea

In recent times ex-IPO Markets are becoming popular due to the attraction of retail investors. Earlier, the pre-market was flooded with high-net-worth investors.

Manish Khanna, co-founder of Unlisted Assets, said, “The pre-IPO market trades in shares of start-ups or mature public companies, before they list themselves on the stock exchange. was not accessible. retail investor Due to constraints on availability in smaller blocks and for institutional investors, shares were generally available in larger blocks.”

“With some tech-enabled platforms that provide end-to-end liquidity to retail users, buying and selling of unlisted shares has become safe, secure, seamless and transparent for retail investors,” he added.

The co-founder of Unlisted Assets sheds light on the purpose of pre-IPO market trades. these:

– Exit from various stakeholders

With the rise in the number of unicorns in India, the opportunity for investors to create a liquidity window has increased. Investing in start-ups at their growth stage can generate exponential returns.

Liquidity window for existing employees

– Often start-ups and privately held companies face a liquidity crunch due to the absence of a market, which helps them sell shares. Secondary markets provide monetization opportunities for employees of unlisted companies including pre-IPO and start-up companies.

– fixed investment

Pre-IPO markets ensure that investors have sure-shot access to inventory, unlike applying for an IPO, where allocation to high-growth companies may be much less likely.

As for Budget 2023 expectations, Khanna said, in the unlisted market, there has been a substantial increase in the participation of retail and institutional investors, including ESOP holders, which created a demand for building a liquidity protocol around the ecosystem of unlisted shares in India. Is. At times, it is very difficult for investors to exit and liquidate their investments.

“Though certain platforms have emerged to provide monetization opportunities for investors and employees in unlisted companies including pre-IPO and start-up companies, where in the budget of 2023, against unlisted shares/ESOPs of those companies Liquidity is difficult to obtain, such platforms can be given tax relief or incentives for their promotion and growth,” Khanna said.

On the IPO market outlook for 2023, Subramanya SV, Co-Founder and CEO, Fisdom said, Indian capital markets have been strong in the recent few months. He added, “We are seeing many IPOs getting completed with good post-listing performance. This strength for IPOs will continue as these IPOs are being backed by domestic retail and institutional capital, whereas earlier capital markets Foreign institutional investors were heavily dependent. Inflows into vehicles such as domestic mutual funds and alternative investment funds are strong.”

Disclaimer: The views and recommendations given above are of individual analysts or broking companies and not of Mint.