Sergey Kondratenko: The future of IPO: prospects and challenges associated with the introduction of new technologies


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Artificial intelligence (AI) widely covers various areas of human activity, and stock trading is no exception. Today, AI technologies are available not only to professional traders and analysts of large companies, but also to private investors. According to fintech expert Sergey Kondratenko, previously it took weeks and even months to consider various scenarios for the profitability and risks of investments and assess long-term prospects. And thanks to advances in technology, analyzing initial public offering (IPO) data takes just a few hours using AI.

The results of global research show that 27% of companies use AI in their activities, and 44% are at the stage of introducing these technologies. How do these same technologies affect the IPO process?

Sergey Kondratenko is a recognized specialist in a wide range of e-commerce services with experience for many years. Now, Sergey is the owner and leader of a group of companies engaged not only in different segments of e-commerce, but also successfully operating in different jurisdictions, represented on all continents of the world. The main goal is to drive new traffic, create and deliver an online experience that will endear users to the brand, and turn visitors into customers while maximizing overall profitability of the online business.

Positive dynamics of the IPO market: How does AI speed up processes and improve outcomes? – Sergey Kondratenko

The specialist notes that after almost two years of calm, IPO markets picked up in the second half of 2023. In September alone, companies whose shares are listed on American exchanges raised a total of $7.2 billion. This month was the most successful in raising funds through IPOs since the end of 2021. This turn of events, according to Sergey Kondratenko, was facilitated by several factors, including the rapid growth of AI, the successful containment of inflation and the stability of interest rate policy.

The expert argues that AI and data science play a key role in speeding up and improving IPO-related processes. AI is capable of quickly processing huge amounts of data from various sources such as financial statements, market trends and consumer sentiment. It can highlight information that human analysts might otherwise overlook, as well as analyze alternative and unstructured data sources.

In the field of due diligence, particularly when using cloud-based virtual data rooms (VDRs), AI is capable of applying specialized due diligence models. Sergey Kondratenko says that this allows for quick analysis of VDR documents, identifying and extracting relevant data for transactions.

AI can also be used to predict potential synergies, revenue growth and operational efficiencies post-IPO. Algorithms are capable of analyzing a variety of data, including financial indicators, market trends, and company history. Such indicators help companies choose a direction of movement to achieve better results.

Sergey Kondratenko emphasizes that predictive analytics in tandem with AI help companies better understand the potential of transactions and minimize possible negative consequences, increasing the likelihood of a successful merger, acquisition or IPO.

Sergey Kondratenko: Blockchain technologies will transform the traditional IPO

Despite its widespread popularity, until recently the IPO scheme remained largely unchanged for decades and came with some restrictions for both companies and investors. Problems included a long and labor-intensive process, high fees, limited access to a wide audience, lengthy dispute resolution procedures, and an insufficient time window for trading. Blockchain technology has made its adjustments to solving this issue, notes Sergey Kondratenko.

What stands out in this context is Bitcoin, a peer-to-peer payment system built on blockchain technology that has spawned some ICOs (initial coin offerings). As part of an ICO, according to the expert, investors purchase digital coins (tokens) that provide them with access to a decentralized network (“utility tokens”) or fractional ownership of traditional financial assets (“security tokens”).

Sergey Kondratenko highlights some advantages of an IPO on the blockchain.

First of all, companies that choose an ICO instead of an IPO can avoid the involvement of underwriters, and therefore the high commissions that they usually charge.

Companies can attract funding from investors from different parts of the world. Traditional IPOs are often limited to raising funds only from investors who are located in the same jurisdiction as the stock exchange. Here’s another argument in favor of digital assets: issuing tokens based on a standard blockchain protocol allows companies to list them simultaneously on multiple exchanges.

The ICO scheme also brings benefits to investors. Cryptocurrency exchanges operate around the clock. They provide faster trade settlements, lower trading costs, and public verification of all transactions.

Sergey Kondratenko believes it is important to note that ICOs also face their challenges and risks, such as a lack of regulation, the possibility of fraud and security issues. The expert draws attention to the fact that solving these problems requires careful consideration and balancing of many factors.

Investments in the digital era: the most successful platforms and IPO-2023 – Sergey Kondratenko

Today, traditional investment methods, which involve paperwork and lengthy processes, are giving way to new electronic solutions that make investing more accessible and efficient. Sergey Kondratenko says that one of the key changes was the emergence of online platforms. Here are examples of some popular designs.

The optimal provider of IPO services is Freedom24. Freedom24 stands out among the best brokers. This broker is essentially the only one of its kind on the European market whose shares are traded on the NASDAQ exchange. Through its user-friendly online platform, Freedom24 provides its clients with the opportunity to participate in over 250 IPOs.

According to the expert, another reliable platform for those who are planning to purchase shares in Europe is DEGIRO.

– DEGIRO provides real-time access to data on a variety of investment products and numerous stock exchanges around the world. For example, DEGIRO allows you to purchase US stocks in Germany without trading fees, with only a €0.5 external processing fee, says Sergey Kondratenko.

According to the expert, at the start of 2023, following estimates from Bloomberg, new participants in the IPO market were able to attract $21.4 billion The leading newcomers were Arm (a British microprocessor maker), Instacart (a US grocery delivery company), Klaviyo (an American marketing software provider) and Birkenstock (a German premium shoemaker).

Arm Holdings conducted a successful IPO in 2023. The expert emphasizes that the company made the largest initial public offering of shares last year. It chose the optimal moment to enter the NASDAQ exchange during the technological boom in the field of AI. The IPO results were impressive: Arm raised $4.87 billion at the top end of the price range of $47-51 per share, which brought the company $54.5 billion.

Sergey Kondratenko: The impact of digitalization on the IPO process and its regulation

Taking into account all the advantages of technological progress, the oversaturation of the market with digital technologies has a significant impact on the IPO process and its regulation. Sergey Kondratenko names several aspects that should be taken into account:

  • Transparency requirements. Regulators may tighten IPO standards to embrace innovation to provide investors with the best possible information about the financial health and risks of digital companies.
  • Market volatility. The digital technology market is often characterized by a high degree of volatility, which can affect companies’ decisions to pursue an IPO. Investors, in turn, face increased risk, which may lead to changes in their strategy and requirements for entering an IPO.

Both companies and regulators must adapt their approaches to IPOs, says Sergey Kondratenko. This must be done to effectively manage changes in the digital ecosystem, as well as ensure sustainability and transparency in financial markets.

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