Deal momentum cooled as nerves crept in
After a brisk first half, Europe‘s equity-raising engine downshifted. Firms had rushed to raise money to finance spending on acquisitions, electricity networks and AI buildouts, but the pace eased later on. Bloomberg data show third quarter equity issuance fell by about one fifth from the same period a year ago, and September came in softer than last year as investors tiptoed around upcoming central bank calls, a trickier market tone and a late Labor Day that pushed some deals back.
The setup for the fourth quarter is not looking especially bright, with higher rates and inflation still in play and geopolitical risks refusing to fade. A Bloomberg visualization covering European ECM for the initial three quarters of 2025 and 2026 clarifies that those figures omit convertible bonds.
Fundraising continues, just with a different mix
Deals have not vanished. In the past week, Land Securities Group Plc in the UK, Rexel SA in France and Belgium’s Warehouses De Pauw collectively raised $1.7 billion through separate share sales to finance transactions and expansion. Bankers argue the core pitch behind this year’s funding wave remains intact, even as policy tightens and AI enthusiasm faces more scrutiny.
They are also leaning on sturdy share prices and earnings to keep capital raising and investor appetite at elevated levels despite the wobblier backdrop.
Equity issuance is one of the first things to stall when confidence wobbles. Market Briefs follows the deal pipeline free every weekday.
Earnings and convertibles step into the spotlight
Profit strength is carrying a lot of weight. According to Bloomberg Intelligence, MSCI Europe constituents saw earnings rise by 18% in the second quarter, marking the strongest performance since mid 2022. The next results season should reveal whether that resilience holds, with plenty of optimism already reflected in European valuations.
Higher borrowing costs have revived interest in convertible bonds after a quiet couple of years. Borrowers ranging from blue chip Deutsche Boerse AG to high yield or unrated names like semiconductor group Soitec have used convertibles to finance growth or refinance debt. As Jefferies Financial Group Inc.’s EMEA ECM head Luca Erpici put it, “Convertible debt can also be more competitive in a higher interest-rate environment as an alternative source of capital for companies.”
What the dealmakers are saying and the IPO picture
“While headline indices are near all-time highs and VIX is fairly benign, there are clearly concerns underneath the surface around things like rates, inflation, geopolitics,” said Ashish Jhajharia, JPMorgan Chase & Co.’s EMEA ECM chief.
“Higher interest rates are generally less supportive for equities, but resilient earnings provide an important counterweight,” said James Palmer, head of EMEA ECM at Bank of America Corp. He expects that investors will continue to support offerings from fundamentally solid companies, including new listings.
IPO prospects are murkier in the near term. Airtel Mobile Commerce NV is still pushing toward a London listing that could be the city’s biggest IPO in five years, but some issuers are waiting for calmer markets and others are weighing options like continuation funds and private sales. Citigroup Inc.’s international ECM head, Ed Sankey, said, “ECM in Europe this year has been a lot less about IPOs.” Sankey anticipates capital increases and other issuance by listed companies will be the primary activity during the remaining months of 2026, ahead of an IPO resurgence next year.
Investors have reasons to be picky. UniCredit SpA’s ECM head, Silvia Viviano, noted that recent European listings over the last 12 months have delivered an average negative return of 17%. “Cash ECM is a bit of a buyers’ market, and it’s imperative to make deals that work for investors,” she said, adding that momentum could close the valuation gap and accelerate IPOs once it returns.
Paddy Evans, co-head of EMEA ECM at Deutsche Bank AG, said, “The best case scenario for next year is sort of B+ market conditions, and companies and their shareholders will have to make difficult decisions as to whether it’s time to go ahead or not.” And Barclays Plc’s EMEA ECM co-head, Lawrence Jamieson, expects a steadier cadence of stock sales now that the latest round of central bank meetings has passed. “Central bank reactions to inflation have been largely in line with expectations, but the geopolitical backdrop in the Middle East continues to wax and wane, as does the rates outlook,” he said. “It will be a watching brief as to the extent it derails the ECM calendar, particularly IPOs.”
For your money, here is the practical bit: deal volume has cooled from the first half’s sprint, but companies are still raising cash through follow ons and convertibles. Whether that pace holds up will likely hinge on how earnings land and how skittish markets feel about rates and geopolitics.
A slowdown in European listings tells you how risk appetite is really tracking. Join Market Briefs free and watch the pipeline.
Source: www.briefs.co
