– a New startup in India for Pre-IPO private equity deals

What if you would have owned a piece of,, Educomp, Biocon, etc when these ideas were conceived and you would have grabbed the opportunity to invest in them much before they hit the capital markets with their public issues?. Today, while you can trade shares on stock markets for “publicly” traded companies, there are no platforms available in India to trade shares of startups in growth stage and pre-IPO companies. There are over 3.2 lakh registered companies with RoC whose shares are not traded at the stock exchanges. Many of these companies are giving excellent returns to their stakeholders. We all know that it is not possible to buy/sell shares of such companies today – but it is going to change.

Three CEOs of well established IT companies in Ahmedabad – Roshan Shah, Ankur Patel and Rushik Shah with leading CA – Bhavik Shah and CS – Keyur Shah as advisors – have plunged to develop an online platform “SharesVault” where business owners can connect with investors to trade unlisted, Pre-IPO shares of growth stage companies. Business owners will have to become paid members of “SharesVault” to submit their audited annual reports and financials to SharesVault Team. SharesVault will engage services of independent analysts/valuation experts to contribute research reports on strict well defined and documented criteria. These independent analysts will also undertake company valuation of member companies from time to time to help buyers and sellers to agree on a specific price for the transaction.

SharesVault aims to provide investors and site users access to corporate documents and research reports for member companies that are Public Limited (capital – Rs. 5 Lakhs plus) and other  prescribed criteria. Companies featured in SharesVault must have consistently been in profit for last 3 years and with valuation of over Rs. 10 crores.

Investors will also be facilitated to view the transactions history of past deals on this company. While SharesVault is not a real-time exchange, it will facilitate direct transaction between Buyer and Seller via escrow. Full disclosure of investor and in-person verification with notarized documents will be a necessity prior to investor putting any funds in any entity featured on SharesVault. SharesVault will work with Financial Institutions to facilitate transactions seamlessly both for Buyer and Seller. Selling Companies will have final say whether they would allow a particular buyer to buy that lot of shares for the offered price. When the shares have already been sold to a third party seller and he wants to resell the share at a higher price and there is a buyer who wants to buy those shares, it is when we have a further set of criteria to help the transaction. While company can deny the transaction, company must agree to pay a fair value to the original seller and buy back these shares.

“We want to keep this platform clean with utmost aim to keep investors interest as top priority. For this, we are working hard to have rules put in place for transactions to happen through this platform” – says Roshan Shah – Co-Founder SharesVault.

Both Buyers and Sellers will pay a piece of that Transaction to SharesVault. Buyers have to have PAN Card and personal investible Net worth of at least 20 Lakhs(held for at least 2 years). There is no restriction on sellers who have got shares via SharesVault.

There will be a basic fee of Rs. 1000/yr for paid membership as individual buyers and individual sellers each to be members of this site. They will also have to put in their detailed profile and comply with all documentation needs of SharesVault. If Individuals do not want to transact, they can still get basic membership on site and access research reports for FREE. Institutional investors shall be offered and charged with premium membership with other value added services.

Business Owners who are sellers of equity on SharesVault will join the portal as business member and their pricing will start at Rs. 10,000 per quarter. These businesses can also request add on services from SharesVault for their Business Plan preparation, Valuation and Financial Advisory needs of business.

This is a great platform for employees of privately held public (pre-listed) companies to unlock the value of their vested stock options. This portal can unlock value for their ESOPs  and they can gain money for their sweat equity which would not be possible otherwise unless the company goes through dilution rounds. And if the company does not go through dilution rounds, these vested stocks that have value today may be worthless tomorrow.

“We hope that this platform will showcase lot of rising stars from all over India and will increase M&A activities in India.” – adds Ankur Patel – Co-founder SharesVault. He further adds – “India is an emerging market and there is lot of investible money lying with people with deep pockets and many of these people are risk taking individuals. We want to show them fast growing companies and let them decide whether they want to put money in these today”.

Most of the sellers initially would be current or former employees, followed by business owners.

“Government regulations are not there right now in India for such a platform but as volumes pick up and deal sizes get bigger, I won’t be surprised if there is regulation put in place” – says Rushik Shah – another Co-Founder of SharesVault.

SharesVault is currently registered as a partnership firm in Ahmedabad.

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