A new wave of IPOs in Europe on the horizon? Bankers say "this time it might be for real."

Notice, bankers' predictions of a revival in European IPO activity have not always stood the test of time. But they say that next year may truly be different. Since September, a strong batch of new listings (with most performing well after listing), along with several large companies planning to go public next year and a rising stock market, have given IPO bankers confidence that the market will return to pre-pandemic levels in 2026. Since 2021 (which was a bumper year for IPOs), the European market has seen a lack of IPO activity. In the following years, there has only been sporadic activity, but worries such as the Russia-Ukraine conflict, rising interest rates, surging energy prices, conflicts in the Middle East, political turmoil in the Eurozone, tariffs, and trade wars have created uncertainties that made IPOs difficult to push through. These concerns are starting to ease, and bankers looking ahead to next year say the outlook seems brighter. Chad Cohn-Mark, Head of Equities Capital Markets for Europe, the Middle East, and Africa at Goldman Sachs Group, says: "It looks like for the first time in this cycle, we will have decent IPO activity throughout the year." Following the IPO boom in 2021, IPO fundraising in Europe has decreased. The core of this change is the companies listing in September and October. Home security company Verisure Plc launched the region's largest IPO since 2022, followed by consumer loan group Noba Bank Group AB and prosthetic manufacturer Ottobock SE. They led the rebound in issuance, with their trading prices higher than their listing prices in the following weeks. Lawrence Jameson, Co-Head of ECM for Europe, the Middle East, and Africa at Barclays Bank, said: "I really do think this batch of IPOs after the summer marks a turning point. It is clear that the backdrop for the European IPO market seems the most constructive since the start of the Russia-Ukraine conflict." Since September, the largest IPOs in Europe have mostly gone up. Data shows that although disruptions from US tariff policies in the first half of the year, exchanges in Europe, the Middle East, and Africa have raised over $21 billion through IPOs this year, a 34% decrease from 2024. This is in contrast to the situation in the US and other Asian markets where IPO fundraising has exceeded the previous year. Ashish Jharia, Head of ECM Syndication for Europe, the Middle East, and Africa at JPMorgan, said: "Next year should be much stronger. The pipeline of potential IPOs is significantly higher compared to a year ago." Armaments manufacturer Czechoslovak Group AS is preparing for an IPO in Amsterdam in the first quarter of next year, with a valuation of up to 30 billion. Software company Visma AS is considering listing in London in the first half of 2026, with its latest valuation in 2023 at 19 billion. IPO fundraising activity in the US and Asia rebounded this year. Several multi-billion-dollar IPOs are in the works. Tank manufacturer KNDS NV and elevator manufacturer TK Elevator GmbH have reportedly hired financial advisors to help prepare for their public offerings next year. Some companies that postponed their listing plans in 2025 are now reconsidering going public. Ed Sanki, Head of Equity Capital Markets for Europe, the Middle East, Africa, and Asia Pacific at Citigroup, said: "I agree that the European IPO market is at its strongest level in years, based on the pacing and mandates we are seeing, and companies that may come to market in the next 12 to 24 months." This does not mean there are no risks ahead. "As always, there remains the possibility that macroeconomic events, policy or geopolitical tensions, or a market correction could increase volatility and affect the execution capabilities of the pipeline," he added. In recent weeks, the stock market has been volatile as concerns over overvalued stocks related to artificial intelligence spending. In this backdrop, some equity capital markets bankers suggest that companies take advantage of the current market momentum and hasten their listings. Andreas Bernstov, Global ECM Head at BNP Paribas, said: "From an ECM perspective, the rational thing is to complete the transaction as quickly as possible. The change, if any, is that people have been advancing timelines to take advantage of what appears to be a risk-on market for the next six months." European benchmark indices, including the Stoxx 600, FTSE 100, CAC 40, and DAX, have all hit record highs this year. This encourages issuers to enter the market, although ironically, there is a risk of dampening market sentiment if the market starts to decline from its peak. Gareth McCartney, Global Head of Capital Markets Origination at UBS Group, said: "What is unsettling about this IPO cycle is that it started when the stock market was at or near historic highs." He pointed out that while this poses a risk, the breadth of industries involved in the IPO pipeline in Europe including defense, infrastructure, and finance should make it more sustainable. In fact, the recent performance of the latest batch of European IPO companies has even surpassed those that went public during the US government shutdown. "Their trading performance, if not exceeding, is at least on par with US IPOs," said Komac of Goldman Sachs. "This is an important positive signal."