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P.E.-Backed IPOs Fare Better In U.S.

Only a week after reporting that companies in Europe backed by private equity did half as well as those supported by other means, Financial News, citing additional figures, says that p.e.-back flotations in the U.S. outperformed those going public by other means.

Only a week after reporting that companies in Europe backed by private equity did half as well as those supported by other means, Financial News, citing additional figures, says that p.e.-back flotations in the U.S. outperformed those going public by other means. Based on data from Dealogic, FN found that p.e-backed IPOs in the U.S. returned 32% over the past four years, compared with 31.6% for those floats without p.e. backing. FN notes that in 2003 private equity-backed listed companies saw issue prices move up an average of 33% by the end of May of that year, while those without private equity grew 50%. In subsequent years, however, companies with p.e. backing have done better; in 2004, share priced climb 46.6% in value, compared with 38.1% for the non-p.e.-back companies. Last year, p.e.-backed companies shot up 43.4%, while the others rose only 28.7%. In terms of which p.e. firms had the greatest IPO success, General Atlantic leads the list returning an average of 199% for the flotations it boosted, followed by Fortress Investment Group, Soros Private Equity Partners, Whitney & Co. and Apax Partners. Dogs in the group had a rough time, including BancBoston (down 19%), Citigroup (down 17%) and Thomas H Lee Partners (down 16.5%). Some of the biggest p.e. firms reported only so-so-success: Kohlberg Kravis Roberts (up 10.8%) and Texas Pacific Group (up 8%). FN suggests that U.S. p.e. firms may have outperformed their Europeers because they “are better placed to read markets and deliver more robust companies.”

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