Private Equity Fund Managers Going Public: A study of the characteristics of seven listed private equity fund managers

Abstract: Listed private equity ("LPE") entities is a relatively new phenomenon and there is little research done regarding LPE entities in general and LPE fund managers in particular. The purpose of this thesis is to investigate if there are any common characteristics for LPE fund managers going public using a sample of seven LPE fund managers. We apply a hypothesis driven approach using both qualitative and quantitative methods. The result of this thesis finds that the key reasons to go public are to fund growth and improve employee incentives. The results indicate that after the IPO, the LPE fund managers get a more diversified investor base, that primarily consist of investors with indicated limited access to limited partnerships rather than existing LPs. We also find that, while fund performance deteriorates significantly post-IPO, fundraising does not increase after the IPO. Moreover, contrary to our expectations, only two of the seven LPE fund managers experienced underpricing the first day of trading. Finally, the results show that the LPE fund managers have a higher exposure to the market than the LPs. We present two main conclusions; (1) the actual reason to go public is for the founders to realize value and (2) investors, with indicated limited access to limited partnerships, are more frequent owners of the LPE fund managers as this is the only - although limited - way for them to get exposure to the private equity market.