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The Wall Street Journal’s report shows that top investment bankers in London are positioning for a rebound in fees in 2026, principally driven by a resurgence of private equity (PE) activity and IPO issuance. Revenue in Europe lagged the U.S. in 2025—just ~2% growth to USD 22.4 billion, versus a 14% increase in the U.S. to USD 49.5 billion—while global dealmaking fees rose about 13% y-o-y to ~USD 96.6 billion [1].
Private equity’s comeback is central. Across Europe there is mounting pressure from sponsors seeking exit routes via IPOs or structured mechanisms such as continuation vehicles, particularly as valuation gaps narrow and financing costs stabilize. Banks like Morgan Stanley and Baird highlight this as a key contributor to their forward deal pipelines [1][4].
IPO activity has been severely depressed in Europe throughout 2025, nearing a 20-year low in deal count and raised capital; Europe raised just ~$5.8 billion in IPO proceeds by mid-year, down ~64% y-o-y [10][5]. But Q3 showed sharp signs of rebound: IPO proceeds in Q3 increased nearly sixfold over Q2, global IPO deal volume up 19% y-o-y, and Europe benefiting from regulatory tailwinds and stronger investor demand [11][7].
Specific regions such as the Nordics (notably Sweden) stand out. Sweden has raised almost USD 2 billion so far in 2025 — outpacing London by over 8× in IPO volumes — supported by strong domestic equity culture, supportive regulation, and a steady pipeline of high-quality PE-backed companies planning large-cap listings [9][1]. London, recovering more slowly, is expected to get a lift from Listing Rule reforms, wider index inclusion thresholds, and a spate of large and midsize UK IPOs preparing for 2026 [7][17][1].
The risks are non-trivial: macroeconomic uncertainty persists—ECB/BoE interest-rate paths remain unclear, inflation pressures linger, political instability looms—and valuation mismatches still delay deals. Additionally, Europe faces competition from U.S. markets, which offer deeper liquidity and often more favorable valuations, potentially driving cross-border IPO migration [5][4].
In sum, while 2025 has been weak for Europe outside the U.S., the convergence of private equity exit pressure, improved IPO pipelines, regulatory reforms, and more stable macroeconomic indicators suggest substantial upside for European investment banking fees in 2026. How much Europe can close the gap with U.S. dealmaking, especially in large-ticket IPOs, remains an open question.