Forum for Science, Industry and Business

Sponsored by:     3M 
Search our Site:

 

New Cass research shows private equity-backed IPOs outperform market

18.06.2008
Professor Mario Levis’s research shows nine percent outperformance

Research published by Cass Business School provides new evidence on the strong performance of private equity-backed IPOs.

The report was commissioned jointly by the British Private Equity and Venture Capital Association and the London Stock Exchange, and covers the period January 1995 to December 2006. Key findings include:

private equity-backed IPOs outperform other IPOs by more than 9% one year after their public listing

they also outperform the FTSE ALL Share Index by 20% over the same period

venture capital-backed IPOs typically spend up to five times as much on R&D as their non private equity-backed counterparts at the time of flotation

typical private equity-backed IPOs spend twice as much on capital expenditure in relation to total assets as non private equity-backed companies.

Commenting on these findings, Simon Walker, 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. The figures on spending on R&D and capital investment underline the big contribution that private equity and venture capital make to creating both businesses and an economy that are more innovative.’

The report also shows that:

private equity-backed IPOs account for more than 50% of the total number of companies in the consumer services, industrials, healthcare and technology sectors in the Main market.

The majority of venture capital-backed IPOs are in the health and technology sectors out of 1,735 IPOs on the London Stock Exchange Main and AIM markets between 1995 and 2006, private equity-backed IPOs accounted for 22% of the number of IPOs and 27% – or £18.9 billion – of the total sum raised the average length of time a private equity firm invests in a company before flotation is 4.5 years for venture-capital-backed IPOs and 3.8 years for PE-backed IPOs

IPOs in the Main market perform relatively better than their AIM counterparts the PE firm typically holds an average of 33.2% in venture capital-backed IPOs and 59.2% in PE-backed IPOs just before flotation. Immediately after flotation, these holdings are at 19.8% and 28.5% respectively, showing the continuing involvement that the original investors have in the business.

Professor Mario Levis, author of the Report, said:

‘The study shows significant aftermarket performance for private equity-backed IPOs. Such IPOs are more profitable, they are run more efficiently and they invest more in both physical assets and R&D than their non-private equity backed-counterparts. Investors will increasingly look for such attributes in companies seeking a public listing under the challenging current market conditions.’

Nick Langford, Head of UK Business Development for Equity Primary Markets at the London Stock Exchange, said:

‘These findings underline the importance of the complementary relationship between private equity and venture capital and our markets. In particular, the success of AIM has provided a choice of exit routes catering to companies of different sizes and sectors and at different stages in their development.’

Dimitra Koutsantoni | alfa
Further information:
http://www.cass.city.ac.uk/media/stories/story_15_18491_112020.html

More articles from Business and Finance:

nachricht RWI/ISL-Container Throughput Index ending 2017 on a positive note
24.01.2018 | RWI – Leibniz-Institut für Wirtschaftsforschung

nachricht Uncovering decades of questionable investments
18.01.2018 | University of Texas at Austin, Texas Advanced Computing Center

All articles from Business and Finance >>>

The most recent press releases about innovation >>>

Die letzten 5 Focus-News des innovations-reports im Überblick:

Im Focus: Demonstration of a single molecule piezoelectric effect

Breakthrough provides a new concept of the design of molecular motors, sensors and electricity generators at nanoscale

Researchers from the Institute of Organic Chemistry and Biochemistry of the CAS (IOCB Prague), Institute of Physics of the CAS (IP CAS) and Palacký University...

Im Focus: Hybrid optics bring color imaging using ultrathin metalenses into focus

For photographers and scientists, lenses are lifesavers. They reflect and refract light, making possible the imaging systems that drive discovery through the microscope and preserve history through cameras.

But today's glass-based lenses are bulky and resist miniaturization. Next-generation technologies, such as ultrathin cameras or tiny microscopes, require...

Im Focus: Stem cell divisions in the adult brain seen for the first time

Scientists from the University of Zurich have succeeded for the first time in tracking individual stem cells and their neuronal progeny over months within the intact adult brain. This study sheds light on how new neurons are produced throughout life.

The generation of new nerve cells was once thought to taper off at the end of embryonic development. However, recent research has shown that the adult brain...

Im Focus: Interference as a new method for cooling quantum devices

Theoretical physicists propose to use negative interference to control heat flow in quantum devices. Study published in Physical Review Letters

Quantum computer parts are sensitive and need to be cooled to very low temperatures. Their tiny size makes them particularly susceptible to a temperature...

Im Focus: Autonomous 3D scanner supports individual manufacturing processes

Let’s say the armrest is broken in your vintage car. As things stand, you would need a lot of luck and persistence to find the right spare part. But in the world of Industrie 4.0 and production with batch sizes of one, you can simply scan the armrest and print it out. This is made possible by the first ever 3D scanner capable of working autonomously and in real time. The autonomous scanning system will be on display at the Hannover Messe Preview on February 6 and at the Hannover Messe proper from April 23 to 27, 2018 (Hall 6, Booth A30).

Part of the charm of vintage cars is that they stopped making them long ago, so it is special when you do see one out on the roads. If something breaks or...

All Focus news of the innovation-report >>>

Anzeige

Anzeige

VideoLinks
Industry & Economy
Event News

2nd International Conference on High Temperature Shape Memory Alloys (HTSMAs)

15.02.2018 | Event News

Aachen DC Grid Summit 2018

13.02.2018 | Event News

How Global Climate Policy Can Learn from the Energy Transition

12.02.2018 | Event News

 
Latest News

Fingerprints of quantum entanglement

16.02.2018 | Information Technology

'Living bandages': NUST MISIS scientists develop biocompatible anti-burn nanofibers

16.02.2018 | Health and Medicine

Hubble sees Neptune's mysterious shrinking storm

16.02.2018 | Physics and Astronomy

VideoLinks
Science & Research
Overview of more VideoLinks >>>