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Title: Analytics and empirical studies of IPO survivals and venture capitalists' activities
Author: Mohamed, Abdulkadir
ISNI:       0000 0004 2680 5878
Awarding Body: The University of Manchester
Current Institution: University of Manchester
Date of Award: 2009
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This thesis examines issues related to initial public offering (IPO) and venture capital activities. The thesis first investigates venture capitalists' exits (Le. through IPO, M&A, Liquidation and LBO routes) from their investee companies for a sample of 5059 investments by UK venture capital firms during the period between 1990 and 2006. The time to exit is modelled non-parametrically using cumulative distribution function and parametrically using a frailty model and cumulative distribution function. The evidence shows that venture capital investors tend to exit their portfolios within 7 years after the investments. The time to exit from portfolio companies are shorter in North America than in Europe and the rest of the world. This is likely to be the effect of a developed venture capital market in North America more than in Europe and the rest of the world. I find that experienced venture capital firms as measured by age tend to hold their investments in portfolio companies much longer than inexperienced venture capital providers. In addition, venture capital investors are likely to exit mature portfolios through the M&A route, while young target companies do so through the IPO route. The thesis also evaluates the risk and returns of venture capital syndicated investments between the US and Europe from 1995 to 2006 for a sample of 8780 investments. Of these 6008 investments are exited through IPO route and 2780 are exited via non-IPO method. I find that venture capital returns are higher than market returns. For early stage investments the average returns are 111 percent, while for expansion and later stage investments the returns are 97 and 82.2 percent respectively. I find evidence that the returns are high during the bubble period and also for some sectors (Le. Information technology, Noncyclical consumer goods and Non-cyclical service). The systematic risk (beta) is higher than the market beta for early stage investments. Third and final, the thesis investigates the survival profiles of companies across the globe floated on the Alternative Investments Market (AIM) from its inception in 1995 to the end of 2004. In addition, it compares the survival rates of venture and non-venture backed companies. For a sample of 918 companies admitted to the market, I find survival rates are broadly comparable to North American IPOs, and conclude that, contrary to allegation by the US stock market regulator, AIM is not a casino. I identify four regulatory levers: (minimum) requirements on public float, company age (or trading record), size (Le., market capitalization) and the role (reputation) of the nominated advisors (Nomad). I find that the chances of survival increase with three regulatory levers (company age, size, and Nomad reputation). I find that IPOs incorporated in the UK have higher survival rates than non-UK incorporated IPOs by approximately 2.29years. I also find that consistent with US evidence, initial IPO returns have a positive impact on survival rate.
Supervisor: Not available Sponsor: Not available
Qualification Name: Not available Qualification Level: Doctoral
EThOS ID:  DOI: Not available