Strategic Fit or Financial Flop? Short- and Long-Term IPO Performance of PE/VC and CVC Backed Firms in Scandinavia

Abstract

This paper analyzes IPOs in Scandinavia from 2011 to 2023, using underpricing and BHAR over 6, 12, 18, and 24 months as measures of performance. The findings show that IPO underpricing is evident in the Scandinavian market, with average underpric ing ranging between 11% and 12%. However, neither sponsor-backed nor CVC-backed IPOs exhibit a significant effect on underpricing. Regarding long-term performance, tra ditional sponsor backing is not significantly related to abnormal returns, whereas CVC backed firms underperform at the 6- and 24-month horizons. While still underperform ing, innovation-intensive CVC-backed firms experience less post-IPO underperformance. Lastly, higher underpricing is positively associated with BHAR across the examined pe riods, although the strength of this relationship differs by sponsor type.