The Performance of Private Equity-Backed IPOs


  • I am grateful to Bill Christie (Editor), two anonymous referees, Jay Ritter, Meziane Lasfer, Gulnur Muradoglu, Seraina Anagnostopoulou, and Michele Meoli for their helpful comments, as well as participants at the Athens University of Business and Economics and University of Bergamo finance research workshops. I would like to thank the British Venture Capital Association (BVCA) and the London Stock Exchange (LSE) for help with the data collection and financial support. The views expressed herein are those of the author and do not necessarily reflect the views of the BVCA and the LSE.


My paper examines the aftermarket performance of private equity-backed initial public offerings (IPOs) and compares it to the performances of equivalent samples of venture capital-backed and other nonsponsored issues on the London Stock Exchange during the period 1992-2005. The evidence suggests marked differences across the three groups in terms of market size, industry classification, first-day returns, and key operating characteristics at the time of flotation. In fact, private equity-backed IPOs are larger firms in terms of sales and assets, more profitable, and relatively modest first-day returns. In the three years following the public listing, they display better operating and market performance when compared to other IPOs and the market as a whole.