Want to invest in Pre-IPO? Read how to invest and benefits!
First Published Oct 4, 2024, 12:17 PM ISTInvestors may also encounter the term 'pre-IPO' in the market. However, what exactly is 'pre-IPO'? Here's a basic approach to pre-IPO investments.
Investors may also encounter the term 'pre-IPO' in the market. However, what exactly is 'pre-IPO'? Here's a basic approach to pre-IPO investments.
'Pre-IPO' refers to a pre-initial public offering which refers to the process by which a private firm issues shares to selected investors before listing on the stock exchange. During this time, a company raises capital to support its growth and expansion plans. The stock market debut, or IPO, is the first time a firm offers its shares to the general public. Before the public phase, certain investors get the opportunity to purchase shares, hence the term 'pre-IPO'.
Through Brokerage Platforms: Some platforms specialize in providing access to pre-IPO shares, but they frequently serve high-net-worth individuals. Private equity firms that invest in startups may offer pre-IPO options. Employee Options: If you work for a firm that is going public, you may be eligible for options or shares at an early stage.
Early Opportunity: You can invest at an early stage and potentially benefit from significant price gains when the firm goes public. Discounted Price: Pre-IPO shares are frequently priced cheaper than the IPO price, allowing early investors to maximize profits. Diversification: Including pre-IPO shares in your portfolio might help to diversify your holdings, especially if you primarily own public companies.
Pre-IPO investments are not typically available to everyone. They are typically presented to a specific group, which includes: Institutional investors VCs, mutual funds, and private equity firms. High-net-worth individuals (HNIs) have sufficient wealth to absorb the risk of pre-IPO investments. Company employees and promoters may occasionally be offered pre-IPO shares at a discount.