Our Blog

Tips to Invest for Upcoming IPO Shares in India

An IPO (Initial Public Offering) is the means through which the companies raise funds from the market. From time to time, organizations generate a need for additional funds for a variety of reasons including capacity expansion, diversification of the business, expansion of market reach, etc. This need for funds is fulfilled through the help of an IPO.

IPO does not stand for a single item but represents a variety of different items. One of the items that the IPO stands for is the new offer. If a company is offering its IPO for the first time, it is called a new offer. This new offer then leads to the listing, which further leads to an increase in the capital of the organization.

Other than the new offers, there are also follow-on offers. The follow-on offers are meant for the companies that have already been listed but are offering the IPO to enhance the company's funds. In addition to new and follow-on offers, there is a third category of IPO called offer-for-sale. In this category, the investors sell the part of their holdings through the means of an IPO.

SEBI, the regulator for the securities market in India, has given BSE permission to list its shares on another stock exchange. One can buy Pre-IPO shares of BSE Ltd. in the secondary market of unlisted shares. Presently, one can buy these unlisted shares in India at the rate of Rs. 340 per share.

People generally buy Pre-IPO shares because such form of investment can prove to be very fruitful in the future due to multiple reasons including:

The stock exchange market capitalization is more than USD 1.6 trillion.

There are only two major players in the market, namely, BSE and NSE.

The threat of any new entrant is extremely low.

The market size and market participation are expected to grow significantly.

Before you buy unlisted shares in India, be sure to check the financial robustness of the organization that you are going to invest in. If the company's finances are robust, the likelihood of your investment making profit increases significantly.

One common question that people ask is the eligibility criteria for buying unlisted shares in India. As per the law, any adult with competence for entering into a legal contract is eligible to buy unlisted shares in India. Before the purchase, however, the individual has to have a PAN card issued by the income tax department, and he/she also need to possess a Demat Account. If you wish to sell the shares on the listing, then you also need to possess a trading account. If you already possess the previously mentioned documents, you will be able to buy the Pre-IPO shares of any company that you wish to invest.