Initial Public Offering and Private Equity divestment in the Spanish stock market: an empirical analysis 2005/2025

Initial Public Offering and Private Equity divestment in the Spanish stock market: an empirical analysis 2005/2025

Abstract:

The realization of a private equity fund’s investment portfolio and the subsequent return to financial investors (LPs) of their invested capital together with the corresponding investment gains mark the completion of the investment–divestment
cycle initiated and driven by fund managers (GPs) through the fundraising process and developed throughout the agreed lifespan of the investment vehicle established for that purpose. To bring this process to a close, GPs have at their disposal, as is well known, several exit routes, including the listing of a portfolio company on the stock market and the subsequent sale of shares through an Initial Public Offering (IPO).

This article examines and focuses on the analysis of this exit mechanism. Unlike previous studies addressing the same subject, its distinctive feature lies in its explicitly empirical approach, based on an examination of IPO transactions and their prospectuses conducted in the Spanish stock market over the 2005–2025 period.

While this constitutes the article’s primary focus, it also examines, albeit to a lesser
extent, recent developments in other private equity exit channels, particularly the M&A market. In recent years, both the M&A market and the stock market –especially with regard to IPO activity– have been characterized by
weak performance and limited dynamism. This lack of momentum has not been offset by the expansion of the secondary market, despite the growth of GP-led transactions. This environment has contributed to heightened concerns among LPs regarding delayed distributions, while simultaneously fostering the rise of continuation funds (and, with them, the secondary market) as mechanisms for generating liquidity.

Keywords: private equity divestment, secondaries, SBO, IPO, green shoe, stabilization, lock-up.