When Swedish Kraruna, one of Europe’s most valuable fintech companies, laid the foundation for an early public offering for its blockbuster, it looked past the exchange of Europe and turned its eyesight towards New York. Klarna’s movement symbolizes the differences seen in the public list of emerging America and Asia leaving fragmented Europe behind. So far, the first North American public has raised $17.7 billion in 153 transactions, while Europe manages just $5.5 billion from its 57 listings, according to Factset data. Divergence is also a global phenomenon. “Asia has been very active this year and has been a real driver of strength and leadership for us,” said Tommy Rueger, global co-head of UBS’s equity capital markets (ECM). “Europe has a pocket of true strength and we hope to see activity accelerate through the balance between this year and 2026, but with the year in line with the new issue activities in North America and APAC, the leader of global capital markets,” that sentiment is reflected by Kevin Foley, Head of Global Capital Markets at JP Morgan. Why was Europe behind? The health of European IPO markets has been a source of concern for regional exchanges, investment banks, advisors, financial press and executives of companies considering entering the open market. One of the main causes of frustration is the pure length and unpredictability of the path to public listings in unstable markets. “The IPO process is very long and market risks can be taken during that process,” said Jonathan Murray, co-head of ECM at Mizuho’s EMEA, from Tokyo, where European companies were connected to Asian investors. The process that is published often takes between three to 12 months, depending on how well the company is ready to prepare. During that extension, transactions can be derailed by a wide range of market shaking, astonishing investors and sudden recession in peer companies’ inventory that can change metrics overnight. For example, this year, the MSCI French index has only increased by around 4.5%. Other major European indexes recovered from August after a sudden drop in the spring. “The US, China (and China) are the new highest heights, so Europe is stuck in scope amidst AI support and geopolitical concerns,” noted Barclays equity strategist Emmanuel Kau. For private equity companies that publish a significant portion of European companies, the certainty of M&A transactions is far more appealing than risking public lists that could fail at the last minute, according to Mizuho’s Murray. This is especially true for sponsors who don’t leave completely at IPOs. However, some bankers believe that the shortage of the right kind of companies ready for public scrutiny is to blame for the shortage of European IPOs. According to Luca Erpici, co-head of ECM at Jeffries EMEA, the Jeffries EMEA, “continue to be selective” about who can be listed compared to 2021’s foaming day. “I think we’re in an orderly market,” Elpichi said. “It’s about applying high-quality filters to what comes to the market. The bars are still high, but we’ve seen some large deals in 2026 and (2027) where strong pipelines are being built (fourth quarter).” This “quality filter” is the main reason why the pipeline of PE-favoured IPOs has slowed down. This issue is not biased towards private equity, but Erpici suggested that many companies in their PE portfolio are not suited to the public market, so they demand “the consistent revenue required by the open market.” Companies that cannot deliver reliably after a quarter are suitable for the private market. For example, EQT, one of Europe’s largest PE companies, is bucking the trend with a successful list of skincare companies Galderma’s 2024. Since the IPO, stocks have grown by more than 125%, and EQT has been able to sell an additional CHF5.3 billion ($6.6 billion) worth of stock this year, demonstrating that high-quality assets can still flourish. According to the Deal Making Data Room Platform Data Site, the number of IPO transactions in the pipeline, which show the volume of transactions that can be announced over the next six to nine months, rose 2% in the first half of this year compared to the same period last year. The Gald-Ch 1y line is still running businesses and capital to Andrejka Bernatova in the US. Andrejka Bernatova is the publicly-published SPAC sponsor of the digital asset company in a recent $2.5 billion transaction, saying the advantage in the US market is supported by “depth and liquidity.” “Liquidity is important,” Bernatoi said. “If liquidity is not traded, it’s not worth it to be public.” Meanwhile, Europe is suffering from fragmentation of regulations. There are multiple exchanges in the US, like the NYSE and Nasdaq, all of which operate under a single, seamless regulatory framework overseen by the Securities and Exchange Commission (SEC). In Europe, the patchwork of national regulators creates complexity and friction, and boxing for investors and businesses. Bernatova suggested that future capital-intensive industries, such as AI and energy transition, have no choice but to leverage the US market to increase “tens of millions, hundreds of billions of dollars, hundreds of billions of people.” Jefferies’ Erpici agreed widely, but said that strong businesses like Klarna can make IPOs successful anywhere, including home markets. He said the New York list of Swedish companies is not a replacement for those that cannot be listed in Europe, but is about optimizing long-term outcomes. “The United States is not a solution for businesses that cannot succeed in their own country.”
