Private equity-backed floats outperform the market

Private equity-backed initial public offerings (IPOs) are trading on average 43.9 per cent above their offer price compared to 26.6 per cent for non-private equity flotations, research has shown.

According to a report from The British Private Equity & Venture Capital Association (BVCA) in association with PwC, private-equity backed IPOs are significantly outperforming floats not backed by private equity.

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The data is drawn from an analysis of London IPOs between 1 January 2009 and 31 December 2017.

It shows that the UK listing market has been dominated by private equity since the financial crash, peaking in 2015 when companies backed by private equity represented 70 per cent of new floats and 90 per cent of the value.

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According to the report, one year after listing private equity-backed floats had an average performance of 22.6 per cent up on their offer price, compared to 20.3 per cent for non-private equity-backed floats.

UK capital markets leader at PwC Mark Hughes said: “In the last two years we have seen private equity IPOs reduce as a proportion of the overall IPO activity as the private sale route has won out over the public markets. Notwithstanding that, private equity remains a key driver of the London IPO market and investors remain attracted to the quality of private equity backed issuers.”