Why Private Equity is Destroying the IPO Market

The scale of private equity funds in the US has increased dramatically over the past decade. With that being said, many claim private equity backed Initial Public Offerings (IPOs) make for better investments with substantial returns post IPO. While this may have been true in the past years, PE backed IPOs are moving in a negative direction with various red flags that should not be underestimated. During the IPO Market’s 1Q, PE accounted for 8 of the 24 IPOs raising 4.6 bn, a 7% increase in proceeds from 1Q 2019. PE funds have picked up exponentially in the past decade with an estimated 2.4 trillion in current dry power. As PE grows in the financial world, so does its risks and influences on the IPO market.