How to Buy Pre-IPO Shares in India: The Complete 2026 Guide
Reviewed by Kanishk Dev Bangia, NISM Series XV Certified Research Analyst
Last Updated: June 2026 | Reg. No: NISM-202300182946
Some 320 searches per month are made for "how to purchase pre-IPO shares." There is a certain appeal to the idea of being able to purchase such shares before an initial public offering. However, there is also plenty of fuzzy marketing going on about pre-IPO shares; the concept itself is much more structured than you may have been led to believe.
In this guide, we explain exactly what pre-IPO shares are, how they originate, how to purchase pre-IPO shares in India, and the associated risks.
What "pre-IPO" actually means
“Pre-IPO” is not an investment category. It’s a stage. “A pre-IPO share” simply refers to an unlisted share of a company that will soon become public via filing of DRHP, announcements made, or industry cues.
The difference comes because the term is misused at times:
· If a company has filed its DRHP with SEBI, then it’s for sure on IPO radar.
· If the company is considering listing “over the next few years,” then it’s an unlisted share with an IPO angle in play — that’s a completely different animal.
Either way, the stock will be sold off as “pre-IPO.” The knowledge of what you’re actually getting is the basic skill. For investment type, refer to What Are Unlisted Shares.
Where pre-IPO shares come from
The stocks that you will purchase through the pre-IPO channel are those held by previous owners and not those which have been issued by the company to you in return for your subscription. The usual holders of such shares include:
· Employees holding ESOP shares - Employees who had purchased stocks using their ESOPs and wish to realize the gain before listing.
· Previous investors / Angels / Venture capitalists - People or institutions willing to release some of their holdings.
· Promoters and other existing stockholders - People willing to offer some stocks for sale prior to listing.
The buying process, step by step
The process is similar to buying an unlisted equity. It is as follows:
Step 1: Validate that the company is actually pre-IPO
Verify whether there's an issued DRHP, an expressed plan for listing, and momentum in the sector — and not just a "this should be IPOed sometime soon" notion. It's time to be honest with yourself.
Step 2: Ensure that you have a DEMAT account
Pre-IPO shares will go into your usual DEMAT account (either NSDL or CDSL). No special accounts needed; if you have ever bought a listed equity, you'll have one.
Step 3: Obtain quotes from at least three brokers
Obtain live quotes for the same equity from at least three SEBI-certified brokers. Evaluate based on:
· Spread (5-15% is acceptable; thin market)
· Lot size or minimum ticket
· Settlement period (typically T+2-T+5 days)
Step 4: Conduct KYC
KYC will include your PAN card number, Aadhar number, and bank verification, along with your Client Master Report (CMR). Brokers provide you with a pro-forma invoice including the price and the quantity.
Step 5: Transfer funds to the business account only
Transfer money to the broker's business account via NEFT/RTGS. Never transfer it to their personal accounts. Record down the beneficiary name and the transaction ID.
Step 6: Get credited to DEMAT account and confirm
The seller makes the off-market transfer; after 2-5 days, the shares will show in your DEMAT account. Confirm this through the broker's statement or CDSL/NSDL holding statement, along with obtaining the tax invoice.
Lock-in rules you must know before buying
This is where the pre-IPO investors are caught by surprise. The SEBI guidelines stipulate lock-in provisions for your sale post-listing:
• Pre-IPO shares purchased up to 12 months prior to the IPO are normally under a 6-month lock-in period from the date of listing. You own listed stocks which you cannot sell just yet.
• ESOP shares and private placement shares have different lock-in provisions.
You might still not be able to sell after a successful listing of your IPO. Always remember to ask your intermediary in writing: “Will my shares be locked in after listing?”
The listing-timing risk nobody puts on the brochure
All of the pre-IPO strategy is predicated upon the occurrence of the listing. However:
· IPOs get delayed. The IPO may be delayed for months or years due to unfavorable market conditions, regulatory questions, or management decisions.
· IPOs don't happen. Having filed the DRHP doesn't mean that the IPO is inevitable. Some IPOs are canceled or delayed.
· Listing price cannot be guaranteed to be above your purchase price. It is entirely possible that you may pay too much to buy the stock before listing.
Consider "it will list soon and explode" as an optimistic wish, not a plan. Ensure that your allocation allows you the possibility of a multi-year delay or no listing whatsoever.
What this costs: the all-in math
The above rate is not your total cost. Allow for:
· Intermediary charges / brokerage: 1-3% of value of deal (negotiable for bulk quantities)
· GST applicable to above charge: 18% of above charge
· Stamp duty: approximately 0.015% of the consideration
· Bank remittance charges: negligible
For a purchase of ₹1,00,000 and a 2% brokerage rate, it will come to ₹2,000 brokerage + ₹360 GST on above + stamp of approximately ₹15 = total approx. ₹1,02
The mistakes first-time pre-IPO buyers make
Mistake 1: Believing "pre-IPO" equates to sure profits
It doesn't. It only means earlier and less liquid, and carries listing timing risk.
Mistake 2: Failure to consider the lock-in period after listing
Investing just before an IPO, thinking to sell on listing day, but failing to account for the 6-month lock-in.
Mistake 3: Paying too much due to hype
In thin markets, prices are inflated by volume and enthusiasm. Always seek at least two quotes and be cautious of prices.
Mistake 4: Completing transactions through WhatsApp
Marketing occurs through social media; trades are supposed to be conducted through official channels — quotes, official bank transfers, invoices.
Frequently Asked Questions
Q: Are pre-IPO shares available legally in India?
Ans : Yes, these are unlisted shares, and trading in these shares off-market is legal by way of proper documentation and through an authorized intermediary.
Q: Can I obtain pre-IPO shares from the company itself?
Ans: Generally, no. These shares are purchased from the existing shareholders like ESOP holders, initial investors, promoters, etc., through secondary unlisted markets.
Q: Can I sell these pre-IPO shares after the company launches its IPO?
Ans: Generally, no. Shares purchased within the 12-month period prior to the listing of the shares are usually locked in for six months post-listing.
Q: Will I make money for sure once it is listed if I buy pre-IPO?
Ans: Not necessarily. Overvalued stocks will end up being priced lower than what you paid. Moreover, the whole IPO might get postponed or canceled.
Q: What would be the lowest amount I could invest in it?
Ans: It depends on the shares you choose since some shares have a minimum investment requirement of ₹25,000-₹50,000.
Disclaimer:
This is written for educational and informational purposes only. Nothing here constitutes investment advice or a recommendation to buy or sell securities. All data is sourced from publicly available information. Investments in securities markets are subject to market risks — please read all offer documents carefully before investing.
