When Private Equity Becomes Less Private - A study of aftermarket performance of private equity-backed companies

Abstract: An Initial Public Offering (IPO) is a common exit path for private equity firms. However, the underlying determinants of the aftermarket performance of such listings are limited, particularly in the Nordic region. This thesis consequently intends to test five hypotheses regarding factors that may determine the post-IPO performance of Nordic private equity-backed companies. As a key step in testing these hypotheses, the performance difference between private equity-backed IPOs and non-private equity-backed IPOs is also examined. Using a sample of 309 IPOs taking place between 2001 and 2016, we find that private equity-backed companies tend to outperform their non-private equity-backed counterparts. Evidence regarding the underlying determinants of stock performance is mixed. Though, we find evidence pointing towards that a large retained ownership at IPO by the private equity firm positively affects the aftermarket performance of the portfolio company.