The Certification Role of Private Equity Investors: Evidence from Initial Public Offerings on the Nouveau Marché and the Neuer Markt
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Andrea Schertler, March 2002

Abstract
This paper presents an empirical analysis of whether independent and dependent private equity investors affect the underpricing of firms which went public on the Nouveau Marché and on the Neuer Markt between 1997 and 2000. In the sample of the Neuer Markt, the involvement of private equity investors reduces the underpricing of the firms' shares only if private equity investors sell a part of their pre-flotation shares at the initial public offering (IPO). By contrast, in the sample of Nouveau Marché, private equity investors have no significant impact on the underpricing. Moreover, this paper presents an empirical analysis of whether dependent and independent private equity investors behave differently when the firms that they have financed go public. While the two groups of private equity investors do not differ with respect to their effect on underpricing, they do differ with respect to changes in their number of shares and thus with respect to their divestment behaviour. Independent private equity investors sell significantly more shares when their firms go public than their dependent counterparts do.

Keywords: private equity, underpricing, initial public offerings, Neuer Markt, Nouveau Marché.

JEL classification: G32