Bankers optimistic about European IPOs in 2025

The initial public offering (IPO) market in Europe is expected to continue its recovery in 2025, despite threats from trade tensions and political turmoil, bankers consulted by Bloomberg say, according to Agerpres.

This year, more than $19 billion has been raised on European stock exchanges following initial public offerings, an increase of more than 30% compared to the volume in 2023. However, this is an amount below historical averages, including the peak during the pandemic and the previous decade.

Bankers are optimistic that this positive trend will continue, and expected IPOs in early 2025, such as HBX Group in Spain and Stada Arzneimittel AG in Germany, are expected to pave the way for more IPOs in late 2025 and early 2026.

"There is no doubt that IPOs will face a challenging macroeconomic environment next year, but the need for sellers, particularly private equity, to recycle capital will outweigh anything else," says Lawrence Jamieson, head of capital markets for Europe, the Middle East and Africa at Barclays Plc.

Buyout or venture capital funds are currently sitting on trillions of dollars in assets. The sharp rise in borrowing costs after the Covid-19 pandemic has led to a collapse in valuations, leaving investors who participated in IPOs in the era of cheap money with significant losses. Now, these funds are looking favorably on the idea of IPOs that would allow them to unlock liquidity at a time when interest rates are starting to fall and stocks are hitting record highs.

"The reason we haven't seen more IPOs this year is that both sides, issuers and investors, have been a little bit reluctant. I think we're starting to see a convergence of views," says Richard Cormack, head of EMEA capital markets at Goldman Sachs Group Inc.

Several companies that had planned to go public this year have had to postpone their plans until 2025, citing uncertainty ahead of the U.S. presidential election. Among the risks looming over the 2025 outlook is President-elect Donald Trump's threat to impose tariffs on goods imported into the U.S. Such measures could hurt European stocks at a time of political turmoil in France and Germany, the region's main economies.

On the other hand, bankers hope that the wide valuation gap between U.S. and European stocks will encourage investors to flock to the European IPO market, while Trump's potentially inflationary policies could create a scenario in which interest rates fall more quickly in Europe.

In addition to deals backed by equity funds, European companies that are being pressured to streamline their operations and unlock value for shares are expected to be a reason for new IPOs in 2025. For example, German group Continental AG is being pressured to separate its auto parts business, while Swedish group Embracer Group AB plans to separate its Asmodee Group AB division.

The European IPO market has also been dominated by large deals, with nearly 70% of the funds raised this year coming from offerings worth more than $500 million. Bankers are confident that next year will open the door for mid-sized companies as well.