AFTER all too many lean years, it is with much relief that investor appetite has finally returned to the IPO market, particularly here in
Many investors have long-term growth horizons, so they will have to take a broad view when sizing up prospective opportunities. They will look at the narrative of the business, the so-called "equity story" and ask: where has it come from and where is it going? Is it a yield story or a growth story? They will size up the management team and assess whether they are the right people to deliver on the promises in the prospectus. And, of course, the all-important question in an age of cynicism is "why now?". This framework is imposed on any IPO prospect coming to market by the investment community and, if the answers do not pass muster, capital will go elsewhere.
However, recent commentary suggests that offerings born from private equity are - and should be - treated differently by investors. But there is no reason why they should be and indeed scant evidence that they are. To convince the buy-side to invest, a private equity offering has to do all the things to woo investors that any other listing would do. Investors will look under the bonnet at the capital structure just as they will appraise the track record of the chief executive. Private equity doesn't expect a free pass, but nor should it be treated with suspicion.
Fortunately, despite the current narrative, it isn't. Investors are adopting an air of neutrality in private equity IPOs, and those that are looking beyond first day froth are, more often than not, being rewarded. Since the pick-up in the market (beginning in
Across a wide range of sectors, from
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