Fair Pricing or Sponsor Advantage? Initial Pricing of PE and VC Backed IPOs and Post Exit Performance in Sweden

Sammanfattning

Financial sponsor backing by Private Equity (PE) or Venture Capital (VC) funds is involved inover 40% of Swedish IPOs between 2015 and 2024, yet evidence of its impact on initial pricingand post listing performance from US and UK markets does not translate consistently to theSwedish context. Swedish IPOs generate significant first day returns of 9.8% and first weekreturns of 12.8%, confirming that underpricing is present in the Swedish market. Post listingperformance over the following year is weak, with a positive but marginally significant mean anda negative median, suggesting that the typical Swedish IPO underperforms its benchmark oncethe initial mispricing is corrected. Financial sponsor backing does not explain differences in returns at any horizon, a conclusion that holds across all regression specifications, nonparametrictests and after excluding the anomalous 2021 boom year. The only variable that consistentlyexplains first day returns is firm size, where larger IPOs generate larger first day returns