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Quick AnswerPre-IPO investing involves buying unlisted shares of a private company before its Initial Public Offering. Retail investors can buy these shares through specialized brokers who facilitate the transfer of ESOPs from employees. However, pre-IPO shares carry high liquidity risks and a mandatory 6-month lock-in period post-listing.
A Pre IPO refers to a private sale of large blocks of shares before a stock is listed on a public exchange. Buyers are typically private equity firms, hedge funds, and high-net-worth individuals who are willing to buy the stock in the private market (Grey Market) before the company goes public.
Many people confuse the two. An SME IPO is the actual public offering for small companies, while Pre IPO investing happens before ANY public offering (Mainboard or SME). Because Pre IPO shares are unlisted, they suffer from extreme illiquidity. You can track the live premiums for upcoming public issues using our IPO GMP Live Tracker.
Pre IPO investing is incredibly high risk. Since the shares are not listed on BSE or NSE, you cannot easily sell them if you need emergency liquidity. Furthermore, unlisted shares are subject to a 6-month lock-in period after the company eventually goes public.
Pre-IPO investing is the act of buying unlisted shares of a private company before it launches its IPO on the public stock exchange.
No, you cannot sell pre-IPO shares on listing day. Pre-IPO and early private investors, promoters, and anchor investors are bound by regulatory lock-in periods. For pre-IPO shareholders, a mandatory lock-in period (typically 6 months in India) applies from the listing date before those shares can be traded on the exchange. (Note: If you meant regular public retail shares allotted through an IPO application rather than private pre-IPO shares, those can be sold immediately on listing day once trading begins.)
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