TY - JOUR

T1 - Private equity investment tenure and financial performance: Evidence from European PIPE transactions

AU - Ильина, Юлия Борисовна

AU - Березинец, Ирина Владимировна

AU - Бобылева, Алла Зиновьевна

AU - Буров, Александр Николаевич

N1 - Berezinets I. V., Ilina Yu. B., Bobyleva A. Z., Burov A. N. 2022. Private equity investment tenure and financial performance: Evidence from European PIPE transactions. Vestnik of Saint Petersburg University. Management 21 (3): 327–347. http://doi.org/10.21638/11701/spbu08.2022.301

PY - 2022

Y1 - 2022

N2 - The role of private equity investments in a modern economy is growing. Private equity funds, which operate in the industry, attract capital, and distribute it across a wide range of portfolio companies. These funds hold their stakes in target companies’ capital for different periods of time. Why would a private equity fund choose to invest in portfolio companies for a certain period of time and what would be the impact of such investments on a portfolio company? Is there any relationship between the tenure of investment and the performance of a target company? This paper examines the relationship between the tenure of private equity investments in public equity and financial performance of European companies. Performance is measured by cash flow growth and net debt to EBITDA ratios. Private investments in public equity transactions with public company targets located in Western European countries during a period from 2005 to 2016 were analyzed. The findings reveal the impact of private equity investor presence on the performance of target companies and confirm non-linear effects of the relationships. A nonlinear relationship between private investments in public equity investment tenure and target company’s performance have been found both in terms of its solvency and cash flow growth rate.

AB - The role of private equity investments in a modern economy is growing. Private equity funds, which operate in the industry, attract capital, and distribute it across a wide range of portfolio companies. These funds hold their stakes in target companies’ capital for different periods of time. Why would a private equity fund choose to invest in portfolio companies for a certain period of time and what would be the impact of such investments on a portfolio company? Is there any relationship between the tenure of investment and the performance of a target company? This paper examines the relationship between the tenure of private equity investments in public equity and financial performance of European companies. Performance is measured by cash flow growth and net debt to EBITDA ratios. Private investments in public equity transactions with public company targets located in Western European countries during a period from 2005 to 2016 were analyzed. The findings reveal the impact of private equity investor presence on the performance of target companies and confirm non-linear effects of the relationships. A nonlinear relationship between private investments in public equity investment tenure and target company’s performance have been found both in terms of its solvency and cash flow growth rate.

KW - фонды частных инвестиций

KW - период инвестирования

KW - частные инвестиции в публичные компании

KW - private equity

KW - investment tenure

KW - private investments in public equity

UR - http://www.vestnikmanagement.spbu.ru/archive/pdf/915.pdf

U2 - http://doi.org/10.21638/11701/spbu08.2022.301

DO - http://doi.org/10.21638/11701/spbu08.2022.301

M3 - Article

VL - 21

SP - 327

EP - 341

JO - ВЕСТНИК САНКТ-ПЕТЕРБУРГСКОГО УНИВЕРСИТЕТА. МЕНЕДЖМЕНТ

JF - ВЕСТНИК САНКТ-ПЕТЕРБУРГСКОГО УНИВЕРСИТЕТА. МЕНЕДЖМЕНТ

SN - 1605-7953

IS - 3

ER -