India's fintech boom opens new investment opportunities in private markets

The financial world is changing, especially in India because of the fintech space evolving at a rapid phase, and among the most interesting developments is the emergence of the unlisted market. In this market, investors could invest in shares of companies that are not listed on any exchange. The unlisted market itself offers numerous opportunities, be it a startup or an already established private entity, for individuals who wish to diversify their portfolios and want to invest like venture funds.

What are unlisted shares?

Let's understand with a simple example.

You would probably have wondered how the angel investors and HNIs invest in startups and get the equity. When these investors are providing funds to a start-up, they receive shares of the company in their demat. And yes, these shares are available in demat form just like any listed shares. And the investors receive dividends, bonus, voting rights or any other corporate actions similar to a listed company.

Here is how it works:

The company transfers these shares to the investor's demat account. (Just like any UPI transaction) using the CDSL or NSDL portal where all the shares are stored in India. These shares are completely transferrable. So Suppose the investor choose to sell these shares , So these shares are again transferred by the existing investor who wants to sell these shares to the demat of investors who are willing to buy these shares. And its create a circulation of Unlisted Shares among investors

Example to Understand

Let's go back to our example. If angel investors or HNIs invest in a Oyo during its initial phase, And as Oyo have grow and expanded, there value of initial investment would grow. They might sell their shares to book the profit, and new investors who want to invest in Oyo might buy these shares from them. This buying and selling goes on and on, and this creates the circulation of Unlisted Shares in the market.

Why is the unlisted market booming?

The unlisted market is booming for several reasons, and we are going to talk about the practical reasons for it.

1. Valuation Benefit: By investing in the unlisted shares at the early stages, investors would be buying the shares at a lower valuation. With the company’s growth, the shares might become more valuable and fetch a good appreciation on investment.

2. IPO Craze: As more people are getting aware of financial investments, many individuals are increasingly drawn to IPOs, hoping to get significant returns upon their successful allotment. Further allotment is very less likely because of the higher demand for valuable IPOs; most applicants don’t get allotment. So, investors have started skipping the IPOs and investing in unlisted markets to secure their hands on companies' shares before the IPO.

3. Reduced Defaults: Earlier, investing in unlisted shares involved risks, especially trading with unscrupulous sellers who might fleece the money without transferring shares. Today, there has been a rise in platforms that enable safe transactions between buyers and sellers while charging minimal brokerage and preventing default.

4. Accessibility: The minimum investment for unlisted shares was quite high, which could only be done by angel investors or HNIs earlier. Today, platforms provide an investment options starting from as low as ₹3000, thus accessible to the masses without the requirement of high capital.

Role of Platforms in Unlisted Markets

Investment in unlisted shares has also been facilitated through certain platforms. These enable investment with the necessary infrastructure and support, making the process more accessible and secure for the masses. And one such portal, Stakehub, which has been recently noticed for drawing investors attention in the unlisted market.

How Stakehub is Making a Difference?

Apart from features like low ticket size and no default rate, it comes with other benefits, addressing several other key challenges that the other platforms have not managed to solve.

Here is how it is making a difference:

1. Transfers within 1 day: From a review perspective, the stakehub transfers the unlisted shares within 1 day. Which also minimizes chances of default from their end as well.

2. Streamlined Process: The unlisted share market was traditionally complicated, time- consuming, and had telephone-based deals wherein the broker used to charge considerable amount for dealings. The process of buying and selling has been streamlined at Stakehub. All an investor needs to do is complete their KYC, choose the company, and then make the payment via UPI. The shares will be credited to their demat account in one day. This streamlined was the priority in the unlisted market.

3. Prevention of defaults and low-ticket size: In the past, the unlisted market was marred by defaults because sellers took the money without transferring the shares. It has covered this issue by creating a reliable platform by mediating transactions between buyers and sellers to ensure that transactions are completed without defaults. The platform has taken responsibility for the transaction, which gives assurity to both parties. And starting transactions with a small ticket size and just charging Rs. 99 per transaction.

4. Thorough Support: It offers excellent support to help investors at all stages, and making them aware about all required taxations, Sebi Policies from doing the KYC, and helping them understand how to invest at their portal and how to even sell it.

By overcoming the above challenges, they have made investing in unlisted equity accessible, secure, and easy, which is making it popular among numerous investors.

Discussing the Most Common Questions

1. Is it safe to use Stakehub?

Yes, Stakehub is an entirely safe place to invest in unlisted shares. Here's why:

Legal Compliance: Stakehub is a legally compliant company, registered with the Ministry of Corporate Affairs, MCA. MCA regulates the unlisted market, so all trades take place in a highly stringent regulatory environment.

Office Location: The company is headquartered in Jaipur and allows investors to have an in- person meeting, which adds a layer of trust and transparency.

2. Is Stakehub SEBI registered?

The unlisted market is not SEBI-regulated but MCA-regulated. Wherein Stakehub is entirely compliant with MCA regulation and not SEBI registered. In this way, all the transactions and activities are lawfully and securely undertaken.

3. What If They Stop Operating and Go Away with My Money?

This is a popular fear among investors, and let me reassure you, if they were to shut down, there would be no need to worry because of the following reasons:

Depository Safety: All your shares are kept in your demat account with CDSL or NSDL and not with stakehub. So, even if they stop working, your shares are safe in your demat account and completely accessed by you.

1 Day Settlement: As they offer a 1-day settlement period wherein whenever you buy shares the settlement time is 1 working day further minimizing their chances of defaulting.

Conclusion

The unlisted market is booming, providing opportunities for wealth creation and diversification. At the forefront of this revolution are platforms such as Stakehub, which provides secure, easy- to-use platforms for investing in unlisted shares. Its low investment threshold, efficient processes, and strong regulatory compliance have enabled them to stay at the top of the unlisted market.

Disclaimer: This article has been produced on behalf of the brand by HT Brand Studio.

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