Investing in the stock markets has become much easier for retail investors (like you and me) through new-age brokers and revolutionary tech platforms. But have you ever thought about how you can invest in private companies like Oyo Rooms, Chennai Super Kings, and Reliance Retail?
We’ve seen ace investor Rakesh Jhunjhunwala making crores from investing in pre-IPO companies. For decades, the private equity markets were accessible only for high net-worth individuals (HNIs) and venture capitalists like him. But things are changing! In this article, learn more about India’s private equity market and how you can invest in firms before they list on the stock markets.
What is Private Equity?
We often come across news of prominent venture capitalists and HNIs investing in privately-owned companies or startups in India. These investments are referred to as private equity (PE) in market terms. It helps firms run their day-to-day operations, work on innovative products or technology, and boost growth. Such private investments are also used to fund expansions, diversifications, or acquisitions. With their deep pockets, institutions get first-hand access to lucrative business models. As companies eventually grow and go public, these early investors and promoters sell their shares at a much higher value.
Over the past few years, private companies and startups based in India have flourished by developing disruptive products and technologies. In 2020, investments in the private market were 2.5 times greater than in the public market. As per an EY report, PE and venture capital investments in Indian firms hit a record high of $77 billion in 2021, an increase of 62% over 2020. E-commerce, fintech, and ed-tech continue to be the fastest-growing sectors in our country. Who wouldn’t want to invest in India Inc.?
Unfortunately, retail investors have always faced an entry barrier in the private equity markets. Investment rounds and transactions of private firms are made in bulk for millions of dollars and are not at all pocket-friendly for small investors. PE investments are also illiquid and have a strict lock-in period. In most cases, there is a total lack of transparency in these transactions. When companies such as Happiest Minds Tech, Nykaa, and Latent View Analytics floated their IPOs, most of us would’ve wished to invest in them sooner. Besides, buying shares of undervalued companies has always been the essence of investing.
How Can I Invest in Private Companies?
As retail investors, we often seek new ways to diversify our portfolios and obtain better returns. As such, investing in the equity of private companies allows us to be a part of their growth story. Such investments are now possible through a new platform called Leadoff, which aims to democratise private equity for Indians.
The digital platform essentially breaks the entry barrier and allows you to invest in prominent private companies. It cuts out the middlemen and time-consuming documentation processes to provide a seamless investment platform. You can invest in companies such as Chennai Super Kings, soon-to-be public Oyo Rooms, PharmEasy, and Reliance Retail with a minimum amount of just Rs 10,000! One can make rational investment decisions by going through the financial reports and important documents of these high-growth firms. Investors must always go through these reports thoroughly before investing.
How Does it Work?
Leadoff has established an extensive network of early investors, founders, and other shareholders of privately-owned companies. Thus, they source shares from various entities and transfer them directly to the users on its platform. The share prices are evaluated by the respective companies and their auditing firms. And when you place an order, Leadoff transfers the shares directly to your existing Demat account!
The platform provides bank-level security and a user-friendly dashboard so that you can keep track of your transactions. Positions/holdings can be exited via company share buybacks or at the time of public listing. Also, all transactions made in private equity shares are legal in India!
From taking the decision to invest to actually getting the shares, you will be able to execute transactions in 3 easy steps:
- Browse the company you’d like to invest in. Leadoff has handpicked several high-growth firms after a thorough screening process.
- Research about the company with the help of in-platform reports to make an informed decision.
- Make the payment, and the shares will be directly transferred to your existing Demat account in 24-48 hours.
Lately, we have been witnessing most IPOs getting oversubscribed and a few lucky investors enjoying significant listing gains. Just imagine the returns if you could get on the action much earlier! Join the club of active investors who are passionate about the growth of India’s private markets. While Leadoff is still in a ‘waitlist’ mode, marketfeed readers can skip the queue and join the platform here, https://portal.joinleadoff.com/register/marketfeed.
Access to private equity markets has now been unlocked!
