Anecdotes Versus Evidence: The Institutional Case for IPO Participation
Everyone likes a good news story. For large superannuation fund equity portfolios, a favourite topic is the value Australian equity managers can add by participating in initial public offerings (IPOs).
This paper looks behind the anecdotes of fantastic performance to the evidence around manager participation in IPOs on behalf of their large super fund clients. We explain the institutional IPO process and examine years 2011 through 2018 to test the assertion that managers access IPOs in ways that add value to fund clients. Unlike other studies, we try to capture the true costs to the superannuation portfolio of IPO participation to better determine the value added.