Growth Capital-Backed IPOs

42 Pages Posted: 23 May 2014 Last revised: 14 May 2015

See all articles by Jay R. Ritter

Jay R. Ritter

University of Florida - Department of Finance, Insurance and Real Estate

Date Written: May 13, 2015

Abstract

Growth capital investing is the financing of growing businesses that are investing in tangible assets and the acquisition of other companies. Growth capital is common in retailing, restaurant chains, and health care management, and represents 12% of all venture capital (VC)-backed initial public offerings (IPOs). Since 1980, investing in growth capital-backed IPOs has produced mean 3-year style-adjusted buy-and-hold returns of 23.7%, in contrast to style-adjusted returns of approximately zero for other VC-backed and buyout-backed IPOs. One-third of growth capital-backed IPOs are rollups, and these have produced much higher returns for investors than rollups without a financial sponsor.

Keywords: Buyouts, growth capital, initial public offerings, long-run performance, reverse LBOs, rollups, venture capital

JEL Classification: G14, G24, G32

Suggested Citation

Ritter, Jay R., Growth Capital-Backed IPOs (May 13, 2015). Available at SSRN: https://ssrn.com/abstract=2439907 or http://dx.doi.org/10.2139/ssrn.2439907

Jay R. Ritter (Contact Author)

University of Florida - Department of Finance, Insurance and Real Estate ( email )

P.O. Box 117168
Gainesville, FL 32611
United States
(352) 846-2837 (Phone)
(352) 392-0301 (Fax)

HOME PAGE: http://https://site.warrington.ufl.edu/ritter

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