Analysis-Tariffs, geopolitics drag on European IPOs, even as funds flow in

By Charlie Conchie and Emma-Victoria Farr

LONDON/FRANKFURT (Reuters) -Tariffs and Middle East turmoil are spooking European companies and the investors weighing their initial public offerings even as volatility subsides and money flows back into equity markets, advisers told Reuters.

President Donald Trump’s announcement of sweeping tariffs targeting imports from nearly all U.S. trading partners in April and his subsequent U-turn pause on the levies sent shockwaves through the global economy.

But markets, including those in Europe, have since bounced back. The VIX, Wall Street’s “fear gauge”, has fallen around 67% from a peak touched following Trump’s tariff announcement. And fund inflows into European stocks reached their second-highest level this century earlier this year.

Still, investors remain wary of new listings.

Topping their list of concerns, according to seven IPO advisers interviewed by Reuters, are the potential impact of conflicts like the Israel-Iran war and uncertainty regarding newly listed companies’ aftermarket performance.

“There’s still a bit of nervousness in the network and a hangover from issues around tariffs and the war in the Middle East,” said Scott McCubbin, head of EY’s UK and Ireland IPO practice.

Some companies, meanwhile, are unwilling to accept lower valuations than they had hoped for, the advisers said.

SHELVED LISTINGS

German medical technology firm Brainlab postponed its IPO this week, citing “geopolitical uncertainties”.

Pharmaceutical company Stada delayed its debut in March, citing market volatility, while another German firm, car parts seller Autodoc did the same last month without giving a reason. Glencore-backed metals investor Cobalt Holdings, which was planning London’s biggest IPO of 2025, meanwhile failed to secure enough investor interest, a person familiar with the matter told Reuters previously. Cobalt Holdings declined to comment.

The recent run of shelved listings is making things harder for firms attempting to reopen the IPO market, one person close to the Brainlab IPO process said.

Investors could not agree a price for the offering with Brainlab, the person and a second source said. Existing shareholders were dissatisfied with the makeup of the order book, said one of the sources, both of whom spoke on condition of anonymity because the process was private.

A spokesperson for Brainlab said interest from investors was “very strong” but the conditions were not optimal for an IPO.

While more funds have flowed into European equities this year from investors seeking to reduce their exposure to U.S. assets, that money is going into the stocks of large companies rather than IPOs, said one equity capital markets banker.

Some of the reticence stems from cases like German perfume retailer Douglas, which saw its shares drop more than 12% on its listing debut. It subsequently cut its guidance this year.

The number of companies that went public across the EMEA region in the first six months of this year fell to 44 from 59 in the same period last year, according to Dealogic data.

The amount raised also fell sharply, to around $5.5 billion from $14.1 billion.

In such a challenging environment, Naveen Mittel, head of equity capital markets syndicate for EMEA at Citi, said companies planning an IPO have little margin for error.

“You need to be clean in terms of setup and structure, evaluation of price, and there needs to be no question marks around it,” he said.

A POST-SUMMER IPO REBOUND?

There have been some success stories this year.

Hacksaw, a developer and distributor of online betting games, successfully listed on Nasdaq Stockholm in June.

“It’s hard to draw any firm conclusions from a few deals when others like Hacksaw, are still getting away,” said Michael Jacobs, a partner at law firm Herbert Smith Freehills. “But it does feel like the IPO window needs a summer break to reset.”

Advisers are hoping an array of bigger deals may help open the market in the second half.

That could include a return of Stada, and possible listings of prosthetic manufacturer Ottobock, Deutsche Boerse’s research and technology unit ISS Stoxx, and classifieds business Swiss Marketplace Group.

Stada is evaluating all options for the further ownership of the company including a possible IPO, it said. Swiss Marketplace Group said it had recently taken initial steps to achieve a “high level of IPO readiness”, but its shareholders had not yet made a decision on the possible timing of a float. And Ottobock said it is continually reviewing options including an IPO, but no decision has been made.

Deutsche Boerse said it was considering an IPO of ISS Stoxx, but could also buy out private equity investor General Atlantic from the company. No decision had yet been made, it added.

Despite the bleak year-to-date numbers, the big picture for European IPOs – positive funds inflows and a calming of market volatility – looks good, one equity capital markets banker said.

“The candidates in the pipeline all have next to no tariff impact, so we are optimistic that after the summer the IPO gates will open,” the banker said.

(Reporting by Charlie Conchie and Emma-Victoria Farr; Additional reporting by Lucy Raitano; Editing by Anousha Sakoui and Joe Bavier)