IPO – the Best Scenario? Myth or Reality

According to the World Bank and OECD, more than 330 million companies are registered worldwide. Of these, public ones account for less than 0.02%. As of 2023, only about 58,000 companies were listed on stock exchanges. All the rest, including the largest in the world, are private.

«Investors often live with the myth that an IPO is the pinnacle of a company’s development. But that’s not true. It’s just one of the possible scenarios. And it doesn’t suit everyone» – commented Alexey Ognev.

So is IPO really the best path?

It all depends on the goals, the maturity of the company, and the expectations of investors. To understand the difference, it’s important to look at the features of each scenario:

Public model (IPO)

• Liquidity of shares.
• Access to capital markets.
• Simplified exit for large investors.
• Dependence on news and market panic.
• Pressure to report quarterly results.
• High operational costs.

Private model

• Flexibility and strategic freedom.
• Stability outside short-term market volatility.
• Simplicity in share redistribution, buybacks, and dividend payments.
• Lower liquidity speed.
• Access to financing depends on the efficiency of internal processes.

According to Forbes Largest Private Companies, the largest private companies in the world include:

– Cargill (agribusiness, USA) – $177 billion in revenue.

– Koch Industries (petrochemicals and energy, USA) – $125 billion.

– Bosch (engineering and electronics, Germany) – $91 billion.

– Deloitte (consulting and audit, international) – $65 billion.

When considering examples of growth prior to IPO, especially in strategic industries, Saudi Aramco (oil and gas, Saudi Arabia) stands out as one of the most illustrative cases. This is a private company that, before going public, had reached a capitalization of over $1.7 trillion.

According to Bloomberg, CNBC, and Reuters, Saudi Aramco’s valuation ranged from $1.3 to $2 trillion. The IPO took place in December 2019: only 1.5% of shares were offered, and the company remained under government control (Financial Times). The Guardian reported that at the time of listing, the market capitalization reached $1.88 trillion — the largest IPO in history.

«Each scenario has its pros and cons. We will choose the path that ensures stability, growth, and protection of investor interests. And we’ll leave the myths to the market» – commented Alexey Ognev.

DigiU is completing the formation of a structure capable of implementing all three scenarios: private, public, and tokenized.

Stay tuned for updates and be the first to learn about important decisions made as part of the ecosystem’s scaling.

To share the news, please enter your Personal Account!

Log in to your account