Tariffs hit European IPOs as funds keep flowing

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Behind a television monitor showing U.S. President Donald Trump, the display board with the Dax curve shows falling share prices, in Frankfurt, Germany, Thursday April 3, 2025, after the tariff package announced by U.S. President Trump pushed share prices sharply into negative territory. (Arne Dedert/dpa via AP)
TARIFFS and the Middle East turmoil are spooking European companies and the investors weighing their initial public offerings (IPOs) even as volatility subsides and money flows back into equity markets, advisers tell Reuters.
President Donald Trump's announcement of sweeping tariffs targeting imports from nearly all United States 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 United Kingdom and Ireland IPO practice.
Some companies, meanwhile, are unwilling to accept lower valuations than they had hoped for, the advisers said.
German medical technology firm Brainlab postponed its IPO last 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 source 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 on 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 United States 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 Europe, the Middle East, and Africa (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 US$5.5bil from US$14.1bil.
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 and evaluation of price, and there needs to be no question marks around it,' he said.
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 Kramer.
'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.' — Reuters
Charlie Conchie and Emma-Victoria Farr write for Reuters. The views expressed here are the writers' own.