Underpricing and Long-Run Performance Patterns of Nordic Private Equity-Backed and Non-Private Equity-Backed IPOs

Abstract

This thesis examines the performance of initial public offerings (IPOs) in the Nordic region, specifically focusing on the influence of private equity (PE) backing. The analysis is based on a sample of 825 IPOs listed on the stock exchanges of Denmark, Finland, Iceland, Norway, and Sweden from January 2001 to February 2023. Contrary to expectations, the findings reveal that PEbacked IPOs do not demonstrate lower underpricing on average compared to venture capital (VC)-backed and nonsponsored IPOs. Additionally, the analysis contradicts the assumption that PE-backed IPOs involve more underwriters and engage prestigious investment banks as global coordinators. Furthermore, PE-backed firms exhibit significant underperformance relative to the market and do not outperform non-sponsored and venture capital-backed IPOs in the aftermarket, contrary to previous research. Additionally, there is no clear evidence to support the notion that PE-backed IPOs outperform their industry peers. These findings provide valuable insights into the performance of IPOs in the Nordic region, emphasizing the need to reassess assumptions about the impact of PE backing on underpricing and long-run performance. The results contribute to the existing literature and highlight the complexities of IPO dynamics in the context of private equity involvement in the Nordic IPO market.