Performance Quantiles for Venture Capital and Private Equity Affiliated IPO in India

DOI

10.2991/978-94-6463-696-3_13How to use a DOI?

Keywords

VC Backed IPO; PE Backed IPO; Quantile Regression; Pricing Performance

Abstract

The study objective is to do the performance analysis of Venture Capital and Private Equity backed Initial Public Offering at various quantiles of initial price performance and do the comparative analysis of performance at the median quantile. The study conduct rigorous statistical analysis to assess post-IPO performance measures, including stock returns, using a comprehensive dataset of IPOs. The results of the study show that IPOs funded by Venture Capital and Private Equity performed significantly differently across various performance quantiles. Although IPOs funded by Venture Capital firms often do better in the upper quantiles, the difference becomes less pronounced or even reverses in the lower quantiles.

The study also takes into account how firm-specific characteristics and industry dynamics affect the success of IPOs sponsored by Venture Capital and Private Equity & evaluates the significance of independent variables at various quantiles. The analysis makes use of data from 123 IPOs in India between 2004 and 2017 that were supported by private equity and venture capital.

For VC affiliated IPO, At 25th percentile, Age, Weighted EPS, Post Issue Promoter Holding (PIPH) are statistically significant regressors for initial performance. At 50th percentile Age, PIPH are statistically significant regressor for initial price performance. At 75th percentile Age, Weighted NAV,PIPH are statistically significant regressors for initial return.

For PE Affiliated IPO, At 25th percentile, Weighted NAV, PIPH, Offer Size are statistically significant regressor for initial return. At 50 percentile Weighted EPS, PIPH, Offer Size are statistically significant regressor for initial price performance, At 75 percentile PIPH, IT Industry, Hot and Cold are statistically significant regressor for initial performance. We also conclude that median initial performance is statistically significantly different between Venture Capital and Private Equity Backed IPO based on Mann Whitney U Statistics.

Our study offers insightful information to a variety of stakeholders. Making better informed investment selections can be facilitated for investors by providing them with a more sophisticated understanding of the performance consequences linked to venture capital and private equity financing. Along the way to an IPO, entrepreneurs might learn about the possible advantages and disadvantages of working with VC or PE firms. Our results can also be used by scholars to investigate the intricate dynamics of the VC and PE environment and how they affect the IPO market.

In short, this study adds significantly to the body of knowledge on the subject by revealing the performance disparities between VC and PE-backed initial public offerings (IPOs) across a range of quantiles. Our results highlight the significance of taking into account the particular performance quantile in addition to the kind of private equity support when assessing the possible outcomes of an initial public offering.

Copyright

© 2025 The Author(s)

Open Access

Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

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TY  - CONF
AU  - Marut Dutt
AU  - Seshadev Sahoo
PY  - 2025
DA  - 2025/05/06
TI  - Performance Quantiles for Venture Capital and Private Equity Affiliated IPO in India
BT  - Proceedings of the Sustainability in emerging economies - Integrating business excellence in management education (SEE-IBEME-2024)
PB  - Atlantis Press
SP  - 201
EP  - 240
SN  - 2352-5428
UR  - https://doi.org/10.2991/978-94-6463-696-3_13
DO  - 10.2991/978-94-6463-696-3_13
ID  - Dutt2025
ER  -