The Performance Private Equity Backed Ipos
37 Pages Posted: 26 Oct 2007 Last revised: 22 Dec 2010
Date Written: December 2010
The paper examines the aftermarket performance of private equity-backed initial public offerings (IPOs) based a hand collected sample of private equity-backed and equivalent samples of venture capital-backed and other non-sponsored issues on the London Stock Exchange. The evidence suggests marked differences across the three groups in terms of market size, industry classification and key operating characteristics at the time of flotation. Private equity-backed IPOs exhibit superior performance compared with their counterparts throughout the 36 months period in the aftermarket; such performance is robust across different benchmarks and estimation procedures. The performance of private equity-backed IPOs is positively related to their level of leverage and the proportion of equity maintained by the private equity sponsors immediately after flotation.
Keywords: IPOs, Private Equity, Venture Capital, Long-run performance
JEL Classification: G1, G2, G3, G10, G23, G34
Suggested Citation: Suggested Citation