Unlisted Equities

Unlisted equity refers to the ownership in shares in companies that are privately held and not traded on public stock exchanges. These investments are usually made through using private placements which are sold directly to the company or through the secondary market among private investors.

Major features to know about Unlisted Equity

• Private Ownership: Investors in unlisted equity have stocks in private companies which are not quoted in the stock exchange. These companies do not offer shares to the general public through the stock exchange markets.
• Potential for Higher Returns: Unlisted equity can provide returns more than the listed securities in case if the company is growing very fast or, for instance, it was bought out or went through the IPO.
• Longer Investment Horizon: Most of the equity investments have limited liquidity as they are unlisted and hence involving a long term holding period. It may take some time for the owners to dispose of their stakes and thus they may be forced to stay for a very long time until the company achieves liquidity events via going public or being acquired.
• Risk and Reward Profile: Just as with the unlisted equity investments, higher returns are reaped in but accompanied by greater risks. The risks associated with investing in the stock such as poor marketability, possible lack of periodic financial statements, and master limited partnership company’s unpredictable performance.
• Diversification: Incorporation of unlisted equity in the investment list can be beneficial since they do not have to be aligned with other investment types like stocks or bonds.