PE-backed IPOs outperform

The British Private Equity and Venture Capital Association (BVCA) has released new data which shows that private equity-backed IPOs outperform other IPOs by more than 9% one year after their public listing.

The research, which was published by Cass Business School, London and commissioned by the BVCA and the London Stock Exchange, covers the period January 1995 to December 2006. It also shows that PE-backed IPOs outperform the FTSE ALL Share Index by 20% over that period, and that 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. Also, typical private equity-backed IPOs spend twice as much on capital expenditure in relation to total assets as non private equity-backed companies.

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.”