Investing in pre-IPO shares — i.e., buying shares of a company before it goes public — is becoming increasingly popular in India and globally. These investments offer a unique opportunity to enter early and benefit from potential future growth. But the process can be complex and is often perceived as reserved for high-net-worth individuals or institutional investors.
In this guide, we’ll break down how to buy pre-IPO shares, who is eligible, the risks involved, and the platforms that offer access.
📌 What Are Pre-IPO Shares?
Pre-IPO shares are stocks issued by a private company before it becomes publicly listed on a stock exchange. These shares are generally offered to early investors such as venture capitalists, private equity firms, employees (via ESOPs), and select retail investors.
✅ Why Invest in Pre-IPO Shares?
| Benefits of Pre-IPO Investing | Description |
|---|---|
| Early Entry | Get in before the stock goes public — often at lower valuations. |
| High Growth Potential | If the IPO is successful, returns can be significant. |
| Diversification | Adds a unique asset class to your portfolio. |
| Exclusive Access | Participate in companies that are not yet widely available to retail investors. |
⚠️ Risks of Buying Pre-IPO Shares
| Risk Factors | Details |
|---|---|
| Low Liquidity | Pre-IPO shares cannot be sold easily before listing. |
| Valuation Uncertainty | Lack of financial transparency can lead to overvaluation. |
| Lock-in Periods | Shares may have a mandatory holding period post-IPO. |
| Regulatory Risk | No SEBI protection like listed stocks. |
📝 Who Can Buy Pre-IPO Shares in India?
While earlier it was mainly for institutional or HNI investors, platforms have emerged that now allow retail investors to participate with lower ticket sizes (as low as ₹20,000).
Eligible Investors:
- Accredited or Qualified Institutional Buyers (QIBs)
- High-Net-Worth Individuals (HNIs)
- Retail investors (via pre-IPO platforms or AIFs)
- Employees (through ESOPs)
🛒 How to Buy Pre-IPO Shares in India: Step-by-Step
Step 1: Choose a Pre-IPO Investment Platform
Several platforms and brokers offer access to pre-IPO shares. Examples:
- UnlistedZone
- Share India
- Planify
- Altius Investech
- Gretex Corporate Services
These platforms list available shares and help facilitate the transaction.
Step 2: Research the Company
Before investing:
- Read their financial reports (if available)
- Check their valuation metrics
- Review recent funding rounds and investor profiles
- Look at IPO timeline and underwriter details
Step 3: KYC & Onboarding
- Complete KYC verification
- Link your demat account
- Sign a non-disclosure or private placement agreement
Step 4: Make the Investment
- You’ll get a quote per share (usually higher than face value)
- Investment is done via cheque or online transfer
- Shares are credited to your demat account
Step 5: Hold Until IPO or Exit
- Post-allotment, shares may be locked in for 6 months after listing (as per SEBI rules)
- If the company doesn’t list, you may have to hold long-term or find a buyer in the secondary unlisted market
🧠 Things to Keep in Mind
| Checklist | Why It Matters |
|---|---|
| Company should be close to IPO | Reduces holding period and risk |
| Verify valuation vs listed peers | Avoid overpaying |
| Check investor base and recent funding | Confidence indicator |
| Look into promoter background | Governance quality |
🔍 Pre-IPO vs IPO vs Listed Shares
| Factor | Pre-IPO Shares | IPO Shares | Listed Shares |
|---|---|---|---|
| Liquidity | Low | Medium | High |
| Pricing Control | Negotiated | Fixed/Band | Market-driven |
| Risk | High | Medium | Lower |
| Valuation Transparency | Low | Moderate | High |
🛠 Top Platforms to Buy Pre-IPO Shares in India (2025)
| Platform | Minimum Investment | Key Features |
|---|---|---|
| UnlistedZone | ₹50,000 | Research reports, transparent pricing |
| Planify | ₹20,000 | Startup shares, early-stage opportunities |
| Altius Investech | ₹30,000 | Fast onboarding, real-time inventory |
| Gretex | ₹25,000 | Corporate advisory-backed |
| Share India | ₹50,000 | Also provides IPO financing |
💡 Taxation on Pre-IPO Shares in India
- Holding < 24 months: Short-term capital gains (STCG) taxed at slab rates
- Holding > 24 months: Long-term capital gains (LTCG) at 20% with indexation
- Post-IPO sale is treated as per equity share taxation rules after listing
📈 Real-Life Example
Company: Mamaearth
Pre-IPO Price: ₹92/share
IPO Price: ₹324/share
Listing Gain: ~3.5x for early investors
Note: Returns vary and are not guaranteed.
🧾 Documentation Required
- PAN card
- Aadhaar card
- Canceled cheque
- Demat account details
- Signed NDA (in some cases)
🗓 When Should You Buy Pre-IPO Shares?
- When the company is 6–12 months away from listing
- When there’s recent funding by top VCs
- When company shows consistent revenue growth
- When the sector outlook is favorable
🧑⚖️ Legal and Regulatory Considerations
- Pre-IPO shares are not regulated by SEBI like listed securities
- SEBI mandates 6-month lock-in for pre-IPO shareholders after listing
- Risk disclosure and legal vetting are important
👨💼 Conclusion
Buying pre-IPO shares can be a smart strategy for investors willing to take calculated risks for higher potential returns. While it requires more due diligence than traditional equity investing, growing access via platforms has made it easier for even retail investors to participate.
But remember — not every pre-IPO company will succeed, and liquidity constraints mean you should invest only what you can afford to lock in for a longer period.
🔍 FAQs on Buying Pre-IPO Shares
Q1: Can a normal retail investor buy pre-IPO shares?
Yes, through platforms like Planify or UnlistedZone, retail investors can now access pre-IPO shares with minimum investments as low as ₹20,000.
Q2: Are pre-IPO shares risky?
Yes, they come with high risk due to illiquidity, uncertain timelines, and lack of financial disclosures.
Q3: Do I need a demat account?
Yes. All pre-IPO shares are held in demat form just like regular stocks.
Q4: Can I sell pre-IPO shares before IPO?
Only if a buyer is available in the unlisted market — otherwise, you’ll have to wait until IPO and lock-in period ends.