How Private Equity backed IPOs are attracting investors

The blockbuster LinkedIn IPO is proof of the pent-up demand from investors who have waited out the financial crisis to put their money down.   In the last few years, investors have watched several private equity backed offerings succeed in the market, and the growing attractiveness of the Private Equity market to investors has led to an increase in data room activity.  Private Equity firms are using Firmex for everything from fundraising efforts to ongoing financial reporting and divestments.

Studies show that several private equity sponsors emerged through the financial crisis, with solid portfolios, and the Ernst & Young LLP US IPO Pipeline study reported that of the 125 companies representing $18.4 billion in the IPO pipeline for Q1 2011, almost a third of these companies were backed by private equity and $9.6 billion – more than half of the Q1 pipeline – was represented by just three private-equity backed companies:

  • HCA Holdings Inc. – registered for $4.4 billion
  • Kinder Morgan Inc – registered for $3.3 billion
  • Nielsen Holdings NV – registered for $1.9 billion

According to a recent press release by the Private Equity Growth Capital Council (PEGCC), the PE Index rose to “its highest level since the depth of the recession”.  The PE index is a composite measure based on equity contributions, transaction volume, fundraising and the dollar value of exits, and rose 6% higher for the first quarter of 2011 over Q4 2010.  The lift  was driven by eighteen private equity backed IPOs that amounted to over $12 billion, nearly triple the dollar amount raised from twelve IPOs during the same period last year.

These results show that Private Equity continues to be a vital source of financing.  For more details on how our Private Equity clients use data rooms for fundraising, see our press release Firmex Reports Increased Private Equity Fundraising Activity, or visit our solution page on Private Equity Fundraising.

Debbie Stephenson

Debbie Stephenson is Communications Manager at Safe Food Production Queensland.