UK private equity listings beat market average

May 10, 2018
IPO market dominated by private equity since the financial crisis

UK private equity-backed IPOs are trading on average 43.9 percent above their offer price compared to 26.6 percent for non-private equity flotations, research newly published by the British Private Equity and Venture Capital Association (BVCA) and PwC reveals.

Providing an analysis of private equity-backed IPOs in the UK between the beginning of 2009 through to the end of 2017, the report compares businesses that floated in the same period that were not backed by private equity.  

It shows that the UK IPO market has been dominated by private equity since the financial crisis, reaching a peak in 2015 when private equity-backed debuts represented almost 70 percent of the number of companies listing and almost 90 percent of the value.

The average performance of post-IPO companies relative to the FTSE All Share indices between 2009 and 2017 is plus 24 percent for private equity IPOs and minus 1.5 percent for non-private equity flotations.

One year after listing, private equity-backed issuers record an average performance of 22.6 percent above their offer price, compared to 20.3 percent for non-private equity IPOs.

Noelle Buckley, director of research at the BVCA, says in statement: ‘What this research shows is the positive impact private equity has on the UK public markets and, most importantly, demonstrates how well private equity-backed businesses have performed after they have floated.

‘The aim of investors is to improve the business over the lifetime of the investment so that by the time it comes to sell the equity stake, the company is in better shape than it was. This report provides ample evidence to support this.’

Mark Hughes, UK capital markets leader at PwC, adds: ‘In the last two years we have seen private equity IPOs reduce as a proportion of the overall IPO activity as the private sale route has won out over the public markets. 

‘Notwithstanding that, private equity remains a key driver of the London IPO market and investors remain attracted to the quality of private equity-backed issuers.’

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