Private Equity Portfolio Companies Performance: evidence from the Central European public companies

Abstract

Anton Valerievich Prokhorenko - Citibank Europe, Poland.

E-mail: Anton.Prokhorenko@gmail.com

The article analyses the return of Private Equity portfolio companies, which made an initial public offering in the Central Europe from 2004 to 2014. The ability of the Private Equity funds to generate the abnormal return remains under the question in the academic literature due to limited information regarding Private Equity deals which are available to researches. The analysis of Private Equity portfolio companies' performance, which made an initial public offering, will show the bigger picture and will allow to understand better the Private Equity willingness to generate return, that exceeds the market return. An aggregate data of the initial public offerings on the Warsaw Stock Exchange of thirty one companies with a total value more than one billion USD has been analysed in the article. The parametric and nonparametric tests were used to analyse the statistical significance of the differences of an initial abnormal return and an aftermarket abnormal return from zero. The Mann-Whitney test was used for analysing the difference in means of sub-samples, created in order to the following criteria: market sentiment, industry, ex-ante uncertainty, oversubscription, ownership. The multiple regression was used to determine the factors which have an influence on an initial abnormal return of Private Equity portfolio companies. The results of the analyses are in compliance with the similar researches: the initial return of Private Equity portfolio companies is above the market return; the aftermarket return of Private Equity portfolio companies is not statistically different from the market return. The main factors which determine an initial abnormal return are: ex-ante uncertainty, oversubscription and industry