Australia's PE-backed IPOs outperform wider market - study

The study was conducted by the Australian Private Equity and Venture Capital Association (AVCAL) and global financial advisory firm Rothschild.

Examining all IPOs on the Australian Securities Exchange (ASX) since 2003 with an initial offer size of A$100 million ($93 million) or more, it found that, as of February, PE-backed companies had returned an average 95% growth since listing. This compares to a 2.2% decline for IPOs without PE backing.

However, this stronger overall performance by private equity is largely down to a handful or exceptional listings, including JB HI-Fi, Seek and Invocare, which had gained 921%, 751% and 505%, respectively. The worst performing PE-backed IPOs over the same period included Hastie Group, Boart Longyear, Emeco and Pacific Brands.

On average, returns of PE-backed and non PE-backed IPOs were broadly consistent with each other across a shorter time scale - up to a year - but PE-backed IPOs delivered better returns across longer time horizons.

PE-backed IPOs in 2013 had achieved an average return of 22.5% since listing as of February 2014, compared to an average 1.2% return for non PE IPOs.

Strong performers from the last year include: Virtus Health, an in-vitro fertilization (IVF) business backed by Quadrant Private Equity; online foreign exchange and payments provider Oz Forex, backed by The Carlyle Group, Accel Partners and Macquarie Group; and analytics firm Veda Group, backed by Pacific Equity Partners (PEP).

Assuming the market holds up, a number of other PE-owned assets are expected to go public over the 18 months. Among them are hospital operator Healthscope, movie theater operator Hoyts, cleaning and catering contractor Spotless, and equipment rental firm Coates Hire.

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• Topics
• Australasia
• Exits
• Performance
• Exit
• IPO
• AVCAL
• Australia
• Performance