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Private equity backed IPOs outperform: AVCAL

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By Reporter
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2 minute read

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.”

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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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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.

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