Are you exploring fresh investment opportunities? The world of IPOs (Initial Public Offerings) and Pre-IPO investments can be exciting pathways to grow your wealth. At Ekamya Capital, we specialize in guiding you through these markets with clarity and confidence, Let’s demystify these terms and see how you all of us can benefit.
What is an IPO?
An IPO, or Initial Public Offering, is when a private company offers its shares to the public for the first time by listing on a stock exchange such as NSE or BSE.. This transition helps companies raise capital for expansion, debt repayment, or other business needs.
Investing in SME IPOs allows investors to enter emerging businesses early, where valuations are often more attractive and growth opportunities are stronger.
Types of IPO in India?
In India, Mainly two official types of IPOs, based on the platform where the company gets listed:
Mainboard IPO
For large, established companies that meet higher financial and governance standards. Listing happens on NSE Mainboard or BSE Mainboard.
SME IPO (Small and Medium Enterprise IPO)
For smaller but growing companies that want to raise capital at an early stage. Listing happens on NSE Emerge or BSE SME platforms.
Mainboard IPO vs SME IPO: SEBI Eligibility & Listing Criteria
Parameter | SME IPO (NSE Emerge / BSE SME) | Mainboard IPO (NSE Main / BSE Main) |
|---|---|---|
Regulatory Authority/ Platform | SEBI + NSE Emerge / BSE SME regulations | SEBI + NSE/BSE mainboard regulations |
Minimum Issue Size | No minimum prescribed (practically ₹3–5 Cr) | ₹10 Cr (public issue) |
Maximum Issue Size | Usually up to ₹50–100 Cr (no strict limit, but >₹100 Cr typically moves to mainboard) | No upper limit |
Post-Issue Paid-up Capital | ≤ ₹25 Cr | > ₹25 Cr (mandatory shift to mainboard if crossed) |
Minimum Allottees | 50 | 1,000 |
Underwriting | Optional (merchant banker may underwrite 15–100%) | 100% mandatory |
Offer for Sale (OFS) | Allowed (but promoters’ minimum contribution rules apply) | Allowed |
Listing Timeline | T+3 days (fast-track) | T+3 days (same as SME now) |
QIB Portion | Not mandatory (can be zero) | Minimum 75% reserved for QIBs in book-built issues |
Track Record Requirement | Relaxed (see below) | Stricter profitability/net worth track record |
Migration to Mainboard | Mandatory within 3 years if paid-up capital > ₹25 Cr or if revenue > ₹100 Cr + voluntary migration allowed after 2 years | N/A |
Corporate Governance | Relaxed (fewer committees, no independent woman director requirement initially) | Full SEBI LODR compliance from Day 1 |
Cost & Timeline | Lower cost (₹30–70 lakh), faster process (3–5 months) | Higher cost (₹3–10 Cr+), longer process (6–12 months) |
Data is only for Information Purposes*
What is Pre-IPO Investment?
Pre-IPO investment means purchasing shares in a company before it gets listed on the stock exchange. This usually happens through private rounds where the company raises funds from select investors. Pre-IPO shares are generally bought at a lower price compared to post-listing shares, creating potential for good returns when the company goes public.
In India, Pre-IPO deals happen in two main forms:
Type | Description | Typical Investors | Holding Period |
|---|---|---|---|
Unlisted Shares (Secondary Sale) | Buying existing shares from promoters, early employees, ESOP holders, or early investors via private deals or unlisted platforms. | HNIs, Family Offices, Retail via platforms | 6–24 months (until IPO) |
Pre-IPO Private Placement / PE Round | Company issues fresh shares (or convertible instruments) to raise capital just 6–18 months before planned IPO. | PE/VC funds, large HNIs, QIBs | 12–36 months |
Bottom Line, Pre-IPO is one of the highest reward strategies in Indian equity markets these days - especially for investors who can wait 6–24 months and tolerate illiquidity. In bull markets like 2021–2025, well-timed pre-IPO bets have consistently delivered 2x–5x returns in under 2-5 years.
Who Can Invest in Pre-IPO Shares in India?
Pre-IPO investments are mostly available to: Institutional investors like venture capitalists and private equity firms, High net worth individuals (HNIs), Accredited investors who meet certain financial criteria, Sometimes retail investors through investment platforms offering access to such opportunities.
Investor Type | Eligible? | Key Requirements/Restrictions | Minimum Investment (Typical) |
|---|---|---|---|
Angel Investors/VCs | Yes | Often invited to funding rounds; must comply with AIF regulations if pooled. | ₹1 Cr+ for funds |
High Net-Worth Individuals (HNIs/Ultra HNIs/ Family office) | Yes | Net worth >₹2 Cr for some direct deals; otherwise, same as retail. | ₹25 lakh–₹10 Cr+ |
Resident Indians | Yes | No special restrictions. | No minimum limit |
Non-Resident Indians (NRIs) | Yes | Valid PAN, Demat linked to NRO/NRE account; non-repatriation basis only. RBI reporting if >5% stake. Apply under RII/NII categories if via IPO route. | ₹1–2 lakh+ |
Foreign Portfolio Investors (FPIs)/Foreign Venture Capital Investors (FVCIs) | Yes | SEBI registration; through FPI route for private placements. | $100K+ |
Companies/LLPs/Trusts/Partnership Firms | Yes | Corporate PAN, Demat; no limits. | No minimum |
Mutual Funds | No (as of Oct 2025) | Barred by SEBI from pre-IPO placements to avoid liquidity risks if IPO delays/cancels. | N/A |
Retail Individuals | Yes | PAN, Aadhaar, Demat account. Accessible via platforms. | ₹10,000–₹5 lakh |
As of December 2025, Sources/Notes: SEBI regulations.
How to Invest in Pre-IPO Shares in India? (Step-by-Step Guide for 2025-26)
Investing is straight-forward via digital platforms, but involves risks like illiquidity and IPO delays. SEBI is piloting a dedicated pre-IPO trading platform (announced 2025), which could simplify things further. Choose based on your ticket size- retail investor via platforms like Zerodha, Groww, Motilal Oswal, Angel Broking, HDFC Securities, etc. and larger investor via AIFs/PMS.
Method | Best For | Minimum Investment (Typical) | Minimum Holding Period / Lock-in | Pros / Cons |
|---|---|---|---|---|
Alternative Investment Funds (AIFs) – Category I/II/III Pre-IPO funds | HNIs & Family Offices | ₹1 Cr | 2–5 years (fund tenure; early exit possible with 1–3% penalty in some cases) | Diversified, professional management / High fees (2% + 20% carry) |
Portfolio Management Services (PMS) – Pre-IPO focused | HNIs | ₹50 lakh | Usually 2–4 years (portfolio tenure; discretionary PMS can allow partial withdrawal after 1 year) | Customized portfolio / Higher costs, manager risk |
Direct Private Placement / Late-stage PE round | Ultra HNIs, Institutions | ₹2–50 Cr+ | 1–3 years or till IPO + 6–12 months post-IPO lock-in (depends on shareholder agreement) | Highest upside, direct terms / Invite-only, very high ticket |
Angel Funds / Early-stage VC funds | Accredited angel investors | ₹25 lakh – ₹10 Cr | 4–7 years (typical fund life; secondary sale possible after 2–3 years) | Exposure to very early upside / Highest risk, longest lock-in |
Unlisted Share Platforms (Secondary market purchase) | Retail & HNIs | ₹10,000 – ₹5 lakh | Till IPO date + 6 months post-listing (SEBI lock-in for pre-IPO investors in most cases). Some companies give 0–3 months lock-in if bought very close to IPO | Easy, low entry / Counterparty & fraud risk if not using reputed platform |
Quick Notes on Lock-in (2025 Rules)
Pre-IPO shareholders (anchor + others) → 6 months lock-in from listing date (SEBI norm for most IPOs).
If you buy unlisted shares <90 days before IPO → sometimes reduced/no lock-in (company-specific).
AIF/PMS → lock-in is at fund/portfolio level, not company level.
Tax angle: To get LTCG @12.5%, total holding (pre + post IPO) must be >24 months.
What's the Role of a Fund Manager / Investment Consultant in Pre-IPO Investments?
Investors often get confused between a Fund Manager and an Investment Consultant/ Advisor. Here is the simplest way to understand it:
A Fund Manager handles pooled funds such as AIFs or PMS and takes investment decisions on behalf of the investors.
An Investment Consultant provides advice and guidance to companies or individual investors, but does not manage their funds directly.
In the Pre-IPO space, both professionals play an important role because the segment is complex, high-risk, and requires a deep understanding of valuation, regulations, compliance, and access. With SEBI’s restrictions on mutual fund participation in unlisted shares, the importance of Fund Managers in alternative investments has increased significantly.
Role of Fund Manager
Fund managers (in AIFs, PMS, or pre-IPO funds) act as stewards for investor capital in high-growth unlisted companies.
Key Responsibilities | Details in Pre-IPO Context |
|---|---|
Investment Selection & Screening | Identify promising companies (e.g., expected IPO in 12–18 months); conduct due diligence on fundamentals, valuation. |
Portfolio Management | Allocate funds across sectors (e.g., fintech, EV); stagger investments/exits for liquidity. |
Risk Management | Balance high-risk pre-IPO with diversification; monitor market trends, economic policies. |
Compliance & Governance | Ensure SEBI/RBI adherence; handle reporting, avoid unlisted pitfalls. |
Performance Monitoring | Track returns (aim 3–5x in 2–3 years); adjust based on IPO timelines. |
Example: Ekamya Pragati funds, managers provide access to multiple deals, expert picks.
Role of Investment Consultant (or Advisor)
Consultants (e.g., IPO/pre-IPO specialists from firms like UniQus, CAC, or Jainam) advise investors or companies, not directly manage funds.
Key Responsibilities | Details in Pre-IPO Context |
|---|---|
Strategic Advisory | Guide portfolio diversification; recommend pre-IPO picks based on risk appetite. |
Due Diligence & Valuation | Assess company readiness, financials; help with pricing strategies. |
Access & Networking | Connect to private deals, platforms; source unlisted shares. |
Compliance Support | Navigate SEBI rules, tax implications (e.g., LTCG @12.5%). |
Preparation for Companies | For firms: IPO readiness assessment, governance setup, investor roadshows. |
Example: Ekamya Capital Advisors LLP consultants advise investors or companies, high-growth sectors like AI/energy, etc
At Ekamya Capital, we specialise in helping investors access high-quality Pre-IPO and private market opportunities that are otherwise difficult for individuals to source, evaluate, and execute.
We operate both as a trusted investment consultant and as a SEBI-regulated fund manager, giving our investors a complete, end-to-end solution.
