Pre IPO stocks offer an opportunity to the investors to buy shares of a company for the first time. It is like an IPO. Investing in pre IPO still enables investment in a private firm that has still not gone public. Pre IPO has no guarantee to go public ever.
The pre IPO investing and its shares are offered in large blocks of shares and this kind of investing is done by private equity firms, hedge funds, and big investment banks. Pre-IPO shares are subjected to a lockup period, which averts buyers from establishing a secondary market in which they could sell their shares right away to make a short-term profit.
How does pre-IPO investing work?
Pre-IPO investment is executed when you invest in a private or public limited company before its issuance to the public with an Initial Public Offering (IPO). An IPO allows the trading of private shares when a company starts trading on a public exchange for the first time. Many people do not have proper knowledge, for this reason, pre-IPO shares are not open to all. Pre-IPO shares used to be available to banks, private equity companies, hedge funds, and a few other select categories only. But all these problems are resolved now. Any interested investor can invest in the shares at pre IPO stage by picking up the right business observing the company’s growth trend. The rules of this type of trading allow a corporation to dematerialize its shares, which helps everyone to purchase them and they can be easily moved from one Demat account to another.
Things to know about pre-IPO shares:
Company authenticity
The pre-IPO shares are privately held by the investors. When you purchase pre-IPO shares, make sure to ascertain the legality of the targeted company to invest in. Most probably, the companies registered or the exempted ones are more likely to be legal. If the company doesn’t meet these two requirements, you should most assuredly avoid investing in them. Checking the details of the company from the state securities regulators is always a good precautionary measure.
Unstable returns
The investors buy the pre-IPO shares believing the assured returns on the investment but the market is full of fraudsters and one has to be really careful. To safeguard yourself from such traps, the investors must be realistic in their expectations. The evaluation of Pre-IPO shares is done by a number of different factors and hence fluctuations must be expected. There are possibilities that investors do not get substantial returns on the final listed shares.
High profitability
The companies having ideas that are accepted widely in the market have more chances of getting highly evaluated in the market. The shareholders of such companies are very likely to earn a huge sum of money in a short period of time. This aspect pulls a large number of people to invest in Pre-IPO shares.
Under proper guidance and advice, you can activate your chances of getting great returns easily. Unlisted Assets is one such platform to add on more to your existing investment portfolio. Their expert professionals have a lead on pre-IPO shares dealers and list out the best strategies to get the sure-shot success.
