Investing in pre-IPO shares—also referred to as unlisted shares—has emerged as one of the most promising strategies for investors looking to enter the market before a company goes public. As more high-growth companies delay their stock market listings or choose to remain private longer, the demand to invest in pre-IPO stocks has grown significantly.
Whether you are an experienced investor or a curious beginner exploring new avenues, understanding how unlisted shares work can open the door to exceptional long-term gains.
What Are Pre-IPO Shares or Unlisted Shares?
Pre-IPO shares, also known as unlisted shares, are the equity shares of companies that are not listed on any recognized stock exchange like NSE or BSE. These shares are privately held and are usually offered to institutional investors, high-net-worth individuals (HNIs), and more recently, to retail investors through regulated platforms.
The term pre-IPO shares typically refers to shares of a company planning to launch an Initial Public Offering (IPO) in the near future. These are part of the larger category of unlisted shares, which includes shares of companies that may or may not be pursuing a public listing but are accessible for private investments.
In practice, the terms are often used interchangeably.
Why Invest in Pre-IPO Shares in India?
1. Early Access to High-Growth Companies
Investing in pre-IPO shares gives investors the opportunity to get in early—before a company lists on the stock exchange and attracts mass public attention. Companies that have strong fundamentals, established revenue models, and upcoming IPO plans offer the potential for high returns when acquired at pre-listing prices.
2. Price Advantage Over IPO Investors
One of the biggest advantages of unlisted shares is the pricing. Investors who buy early often get a better valuation than those who invest during or after the IPO. In many cases, pre-IPO shares are available at a discount compared to their anticipated IPO price.
3. Long-Term Wealth Creation
Pre-IPO investing is a long-term strategy. By investing in fundamentally sound businesses before they list, investors can benefit from the full growth cycle of a company—from private stage to post-IPO expansion—leading to significant capital appreciation.
4. Portfolio Diversification
Adding unlisted shares to your portfolio enables you to diversify across industries and companies that are not part of the conventional market indexes. This type of diversification can help balance risk and increase the potential for higher returns.
Popular Pre-IPO Shares to Watch in 2025
In recent years, several companies have gained popularity in the pre-IPO and unlisted share market. These include:
Tata Capital
Reliance Retail
HDFC Securities
Chennai Super Kings (CSK)
Hero FinCorp
Capgemini Technology Services India
Studds Accessories
SBI Mutual Fund
National Stock Exchange (NSE)
These companies are either expected to launch their IPOs soon or are strong players with steady growth and investor demand in the private market.
How to Invest in Pre-IPO Stocks in India
Investing in pre-IPO stocks has become more accessible through the emergence of authorized platforms and intermediaries. Here’s how you can begin:
Step 1: Choose a Trusted Platform
Work with a SEBI-registered intermediary or a reputed financial platform like RR Finance that deals in unlisted shares. Ensure the platform offers proper documentation, transparent pricing, and verified company details.
Step 2: Evaluate the Company
Before investing, review the company's financial statements, business model, industry trends, and leadership. Understand whether the company has a clear plan to go public and whether it has demonstrated consistent growth.
Step 3: Check Live Pricing and Availability
Unlike listed stocks, pre-IPO shares do not have a fixed market price. Pricing is determined based on demand and supply, company performance, and investor sentiment. Always verify current pricing from a reliable source.
Step 4: Complete the KYC Process
To invest in unlisted shares, you need to complete a Know Your Customer (KYC) process. This typically includes submitting PAN, Aadhaar, address proof, and bank details.
Step 5: Make the Payment and Receive Shares
Once KYC is approved, you can make the payment via NEFT, RTGS, or UPI. The shares will then be transferred directly to your Demat account.
Taxation on Pre-IPO Shares in India
Taxation on unlisted shares in India differs from listed equities. Here are the key rules:
Long-Term Capital Gains (LTCG): If held for more than 24 months, the gains are taxed at 20% with indexation benefits.
Short-Term Capital Gains (STCG): If held for less than 24 months, gains are taxed as per your applicable income tax slab.
It’s important to maintain all transaction records for accurate reporting during tax filing.
Risks of Investing in Pre-IPO Stocks
Every investment comes with risk, and pre-IPO shares are no exception. Consider the following before you invest:
Low Liquidity: Since these shares are not traded on public exchanges, it may take time to find buyers if you want to exit your position.
Uncertain IPO Timeline: The company may delay or cancel its IPO plans based on market conditions.
Lack of Public Information: Not all unlisted companies are required to disclose detailed financials regularly, so it becomes crucial to rely on trusted platforms for due diligence.
Despite these risks, the rewards can be substantial for investors who are informed and patient.
Final Thoughts on Investing in Unlisted Shares
The opportunity to invest in pre-IPO shares allows investors to gain early access to promising companies and be a part of their growth journey from the ground up. In 2025, with several major IPOs expected and private market participation increasing, unlisted shares offer a strong avenue for those looking to diversify and grow their wealth over the long term.
However, pre-IPO investing is not about short-term gains. It requires an understanding of the company, the market, and the patience to wait for the right exit point—often post-IPO or acquisition. Investors should always perform thorough due diligence and consider consulting with financial advisors before making decisions.
As access to private markets becomes more democratized, now is the time to explore the benefits of investing in pre-IPO stocks and building a portfolio that goes beyond the conventional.
