Swiggy’s unlisted shares have been in the news as the company prepares to launch its IPO. Should you consider buying it?

The story

Swiggy’s unlisted shares are in the news and investors are rushing to grab them before the company goes public, pumping the price up significantly.

The question is, should you buy them? And importantly, what are these unlisted shares? Are they worth your attention?

Let’s look at it one by one.

What are unlisted shares?

Shares that you can buy or sell on public stock exchanges like NSE or BSE are called ‘listed shares’, meaning their shares are available for the public to trade.

Contrary to this, when the company’s shares are available within a closed circle of investors and are not to the public, they are referred to as unlisted shares.

Not just Swiggy, shares of many other popular companies such as Oyo, Chennai Super Kings (CSK), Bira91, etc. often trade in unlisted avenues.

I know what you are thinking. Is it even legal? The answer is yes. But it is unregulated.

The SEBI regulates public exchanges, and it ensures the safety of participants. That’s not the case when you opt to transact unlisted shares.

Let’s see how it works.

How does the unlisted market function?

The shares of unlisted companies are majorly owned by founders, key employees, venture capitalists, and private equity firms.

They often sell a proportion of the shares they own with the help of some dealer or a broker who facilitates the transfer by arranging counterparties.

These transactions often occur within closed circles and are not easily accessible to the public as compared to listed shares.

Few platforms are available that let the public invest in unlisted entities.

The argument is because of the lack of information, these companies often trade at a discount in terms of valuation relative to their listed competitor.

So does it make them an attractive buy?


Let’s look at drawdowns before we draw any conclusions.

Drawdowns of investing in unlisted shares

1. Low transparency:
Unlike listed shares, the SEBI does not regulate it, and companies are not obligated to publish their financial reports.

2. Illiquidity:
It is difficult to exit stocks since there is no public market for them. Investors might have to sell at a discount because of low demand.

3. Fraud and manipulation:

Investors rely heavily on dealers and brokers to trade, increasing the potential for scams or poor investment choices​.

4. Six-month lock-in period:

Investors who have bought shares before the IPO are not allowed to sell their shares for six months post-IPO.

To conclude

While the unlisted shares might seem like a tempting opportunity. The added risks and constraints make it a high-risk bet. It may be a smarter choice to focus on the many quality companies already available on NSE and BSE.

Listed companies are not only bound to SEBI’s regulation but also offer liquidity, making them a more suitable investment for most of us.