Last Updated on Dec 11, 2023 by Harshit Singh
Have you ever wondered why most investors talk about diversifying their portfolios but often stick with the same old asset classes? The lack of equity investment opportunities prompted investors to look in the same direction. But not now!
Presenting Precize, a fintech investment platform with a purpose – to open up the private markets for everyone. Precize enables investors to explore equity investment opportunities in private companies, which was once a playground for the elite with billions to invest.
Here’s an example to showcase the use case of Precize –
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Untapped Investment Opportunity : Dmart Shoppers vs Unlisted Share Investors
In the world of investments, there’s a puzzling trend. People often prefer investing in well-known big companies, like the ones you see daily. But they sometimes miss out on smaller, growing businesses. These smaller companies possess the potential to be the next multibagger and can be a high-growth investment opportunity for an investor.
Think about DMart, for example. Before its prominence in the stock market, it was a smaller, unlisted company with shares valued at just Rs. 203. Upon listing at Rs. 600 in 2017, and by 2021, as it transformed into a renowned company, its value surged to Rs. 5,599, reflecting a remarkable growth of 2,659% in five years.
This growth showcases the hidden opportunities in the world of investments, waiting for smart investors to find them.
Let’s cut to the chase:
Entrepreneurship in India is flourishing, buoyed by a wave of individuals eager to take risks. These burgeoning businesses often require substantial funding, and private equity funding is vital in bringing entrepreneurial visions to life.
As many companies initiate as private limited entities, they frequently need more significant collateral to secure debt financing. Consequently, there is a growing need for equity-oriented financing. While public equities are familiar, exploring unlisted equities presents an alternative avenue worthy of consideration.
In fact, Global Private Equity Market returns were relatively better during hard times like COVID-19, as shown in the image below:
Now, why is that so? Honestly, the unlisted share market has been a hard nut to crack!
Reasons being:
- Lack of awareness,
- Humongous financial entry barriers,
- Non-availability of a reliable platform,
- Market Liquidation at a discount
Despite being so unstructured, India’s private equity market has been growing at a CAGR of 19% from 2011 to 2020. Following this, it has matured to a market worth USD 232.4 billion [source].
Why does it make sense to invest in these markets?
Investment in Equity of private limited companies can be a great addition to one’s portfolio as it can help you with adequate diversification, note-worthy post-IPO returns, and substantial growth in the long term.
Unlisted Shares and Unseen Potential:
“Private equity remains the darling asset class of sophisticated investors, with many endowments and family offices nearing a 40% allocation,” says Tiger 21, an exclusive club of investors.
Let’s look at some companies that reflect the aspects mentioned above:
Now you have an answer for why it makes sense to be a part of a growth story!
Common risks involved with unlisted companies
Investing in unlisted companies comes with specific drawbacks, primarily –
Lack of Clarity: Unlike well-known companies that regularly share financial information, unlisted firms don’t have to provide as much data. It’s like trying to understand a story with missing pages, making it challenging to judge if it’s a good investment.
Longer Investment Horizon: Investments in the unlisted market often require a longer time horizon; investors may need patience before realising returns.
Therefore, Precize is here to amplify awareness, provide universal access regardless of your financial standing, and, most importantly, respect your privacy. Here’s how you can go about investing in pre-IPO shares –
How to invest in pre-IPO shares?
With Precize, Private Equity becomes simple and accessible to all. Precize breaks entry barriers with a low Rs. 10,000 minimum investment, breaks down barriers, assists in liquidation at CMP, and facilitates quick transactions. We are making the market accessible for easy transactions with private Indian companies.
Step into India’s future private markets with Precize – where technology meets the purpose of democratising the private markets and instilling trust in the Indian private market.
Disclaimer: This information is for educational purposes only; it does not constitute financial advice. Readers are urged to conduct their own due diligence before making any investment decisions.
