Small investors chase new fancy in unlisted avenue

Lured by the promise of outsized returns, early access to high-growth companies, and lower fees, retail investors are venturing into the unregulated and risky world of unlisted securities.

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This, even as the market regulator increasingly tightens its watch over platforms offering such trades, going to the extent of calling such trading illegal.

The interest is climbing.

Monthly trading volumes of unlisted securities in 2024 have surged to $300 million from $50-60 million last year, according to an analyst. Reason: all-time returns from the Primex 40 Index, which tracks top private companies, reached 25.85% compared to the Nifty 500's 15%. However, over the past three years, the Primex 40 has lagged, delivering 12.62% versus the Nifty-500 Multicap's 17.91%.

The top three companies in the unlisted space by market capitalization are NSE, Tata Capital, and Nayara Energy, while Bira and NCDEX languish at the bottom.

This is how it works. Wealth platforms help Esop holders or early investors sell their shares before a company goes public.