Performance of Private Equity Backed Initial Public Offerings: Empirical Evidence from India

Abstract

This article investigates the initial and long-term performance of private equity (PE) backed initial public offerings (IPOs) in India. Using the data of IPOs listed on the Bombay stock exchange from 2009 to 2012, the authors investigate the initial performance of the IPO on listing day for both PE equity backed IPOs and non-PE backed IPOs and documented that PE backed IPOs show less underpricing than non-PE backed IPOs. Then, they compared the long-term performance of PE and non-PE backed IPOs for two years post-listing and documented less underperformance of PE backed IPOs compared with non-PE backed IPOs. Finally, the authors confirmed “fads” in Indian IPOs market but also recorded that the degree of fads was less in PE backed IPOs than in non-PE backed IPOs.

TOPICS: Private equity, emerging, performance measurement, equity portfolio management