Shareholder Gains from Private Equity Placements in India

Amitabh Gupta

The IUP Journal of Applied Finance, 2012, vol. 18, issue 2, 37-47

Abstract: In recent years, private equity has emerged as an important destination for investments in India. This paper examines the effect of private equity placements on shareholder value, changes in liquidity and changes in ownership structure around the announcement of private equity deals. We find that the Indian stock market reacts positively to private equity transactions. The trading volume decreases after the private equity deal; the number of trades and turnover improve after the deal but market capitalization does not increase. There is also a dilution of promoters’ shareholdings after the deal. An analysis of cross-sectional abnormal returns shows that there is a negative relation between growth opportunities and abnormal returns, confirming that private equity announcements have no impact on the growth opportunities of a firm.

Date: 2012
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Persistent link: https://EconPapers.repec.org/RePEc:icf:icfjaf:v:18:y:2012:i:2:p:37-47

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