Private equity IPOs outperform

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Private equity-backed companies listing in the UK tend to outperform other initial public offerings by almost 10 per cent a year after coming to market, new research has found.

Cass Business School published a report yesterday which examined flotations on the London Stock Exchange between January 1995 and December 2006. The report found private equity-backed IPOs made up 22 per cent of the total 1,735 IPOs during the decade, as well as 27 per cent of the total £18.9bn raised. The research, carried out by Cass professor Mario Levis, found that the private equity-backed IPOs outperformed the FTSE All Share Index by 20 per cent.

Professor Levis said the study shows “significant after market performance” for buyout backed IPOs. “Investors will increasingly look for such attributes in companies seeking a public listing under the challenging market conditions,” he added.

The report was commissioned by the British Private Equity and Venture Capital Association and the London Stock Exchange. Simon Walker, the chief executive of the BVCA, said: “This research provides more evidence of the way in which private equity is good at building better businesses by growing value.”