Unlisted equity refers to shares of companies that are not listed on any recognized stock exchange such as the NSE or BSE in India. These companies typically do not meet, or choose not to meet, the regulatory, compliance, and disclosure requirements set by market regulators like SEBI for public listing. As a result, their shares are not available for trading on public platforms and are instead bought and sold through private transactions, over-the-counter (OTC) markets, or via intermediaries and specialized investment platforms

Unlisted equity is most commonly found in private companies, startups, or subsidiaries of larger firms that have not yet gone public through an Initial Public Offering (IPO). Well-known companies such as OYO and Zomato were considered unlisted before their IPOs. Investors are often attracted to unlisted equity because these shares can offer substantial growth potential, especially during the early stages of a company’s development. In some cases, unlisted shares have delivered higher returns than their listed counterparts, particularly if the company later goes public at a premium valuation.

However, investing in unlisted equity comes with significant risks. These shares are less liquid, meaning it can be difficult to find buyers or sellers, and transactions may take longer to complete. There is also less transparency, as unlisted companies are not required to disclose as much financial information or adhere to the same corporate governance standards as listed firms. Valuation of unlisted shares is more subjective, often relying on internal assessments or independent valuations rather than market-driven prices.

Despite these challenges, unlisted equity can play a valuable role in portfolio diversification, especially for long-term investors seeking exposure to high-growth sectors or companies before they become widely accessible. It is crucial for investors to conduct thorough due diligence and understand the associated risks before investing in unlisted shares