Private equity backed IPOs outperform: AVCAL

Private equity backed IPOs outperform: AVCAL

Initial public offerings that have been backed by private equity (PE) have outperformed those that were non-PE backed for the three years to 31 December 2015.


A recent study by the Australian Private Equity and Venture Capital Association (AVCAL) and Rothschild found that PE-financed IPOs that have listed on the ASX since 2013 delivered an average share price return of 40.9 per cent.

Non-PE backed IPOs, from 1 January 2013 to 31 December 2015, returned an average of 25.5 per cent.

AVCAL chief executive Yasser El-Ansary said: “Despite short-term fluctuations year-to-year, the evidence shows that returns are being delivered to investors over the longer term by companies that were previously backed by PE.”

However, the study found that in 2015, the average return for non-PE backed IPOs was 19.3 per cent compared to 13.1 per cent for PE-backed IPOs.

According to the study, both PE and non-PE IPOs have outperformed equivalent investments in the S&P/ASX Small Industrials Index for listings since 2013 and also listings in 2015. 

The study indicated that the non-PE backed IPO sector is dominated by financials, real estate and utilities. The PE-backed sector is dominated by health care, consumer discretionary and IT.

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