Pre-Ipo Shares

Shares of a company before it offers shares to the public in an initial public offering (IPO), held by employees and other investors is called Pre-IPO shares. Pre-IPO investing is buying shares of a company before it offers shares to the public in an initial public offering.

When Pre-IPO Placement occurs?

It occurs when a part of IPO (Public Initial offering) is engaged with private investors, just before when IPO is ready to hit the market. Usually, private investors in pre-IPO placements have large private equity or hedge funds and they are eager to buy a big stake in a company. Pre-IPO placement’s price is less than prospective IPO price.

Breaking down Pre-IPO placement

 A Pre-IPO placement comes only when there is a big demand for a forthcoming IPO. And the reason behind it is that placement’s rate each share, its risk is depending on the company’s finally going IPO and then the trading volume can be generated. In this case, pre-IPO placements reward for that risk by providing a price per share that is lower than it is probable to be at IPO. When the post-IPO demand is lower than the expected demand then risk will rise and price decreases. Though if the demand for post-IPO increases, its price also increases, it might look like private equity and hedge funds will be able to go everywhere and sell these shares at the higher price. To stop all of this there is a lock in period involved to this Pre-IPO placement. This lock-in period will save these amount from selling the shares in the short-term and inclines to fascinate investors who are willing to invest in the company for long time period.

How will Oswal Trading help you?

Occasionally an investor of a pre-IPO company needs immediate cash but they are not able to sell those shares easily because the company shares are not listed yet, in this situation we help by buying and selling in pre-IPO company shares.

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