Value deterioration is something harmful and devastating for firms. Associated with the process of taking a firm public through an IPO is underpricing, the underlying reasons for this phenomenon have been well researched throughout the years. Even though it is proven to exist in various degrees across different markets, it is concluded to exist on all stock markets. Much research has proven that Private Equity- backed firms experience a lower degree of underpricing compared to non-backed firms in their IPOs. Although being a well-researchedarea, a majority of previous studies discusses different variables' presence and impact on how underpricing differs between non-backed and Private Equity- backed firms. This thesis aims to complement existing literature and develop a deeper understanding for why Private Equity firms experience a lower degree of underpricing compared to non-backed firms. The study explores this area through a qualitative study by conducting interviews to create an understanding of how Swedish Private Equity firms act and work while facing this, to them and their portfolio firms, value deteriorating phenomenon. The study concludes that through exercising an active ownership in line with their standardised procedures outlined in the established and well-developed investment plans and governance structures, it seems like Private Equity firms on the Swedish market maintains a lower degree of underpricing for their portfolio firms compared to the non-backed firms. Findings also indicate contradictions to existing literature regarding how Private Equity firms act and what is being prioritised in regard to relationships with investment banks and portfolio firms.
Date of Award | 18 Oct 2022 |
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Original language | English |
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Awarding Institution | - Universidade Católica Portuguesa
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Supervisor | Pramuan Bunkanwanicha (Supervisor) |
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- Underpricing
- Private equity firms
- Portfolio firms
- Investment banks
- Value creation strategies
- Governance systems
- Active ownership
- Mestrado em Gestão e Administração de Empresas
Swedish private equity firms strategies and actions to minimise underpricing in IPOs of portfolio firms
Behm, O. R. (Student). 18 Oct 2022
Student thesis: Master's Thesis