European Investment Banking 2025: Modest Recovery, IPO Slump & Strong 2026 Outlook

Revenue & Deal Volume Trends
In 2025, global investment banking fees totaled approximately $96.6 billion, marking a 13% year-over-year increase. The US contributed $49.5 billion (14% rise from 2024), while Europe saw only a marginal increase to $22.4 billion—up about 2%. Major mega-deals (>$10 billion) in the US pushed its M&A value to roughly $2.4 trillion; Europe’s M&A value rose to $894.5 billion, an increase of about 22% year-over-year. [1]

IPO Markets: Weak in Europe, Stronger Elsewhere
Europe’s ECM (equity capital markets) and IPO markets remained underwhelming. IPO proceeds in the EMEA region dropped significantly in H1 2025: Europe saw proceeds fall by approximately 46% compared to H1 2024. London’s IPOs raised just £160 million across five listings in first half 2025—the lowest since tracking began in 1995. In contrast, global IPO proceeds were up year-over-year. [3][7][1]

Private Equity Exits Delayed, Infrastructure Gains
Private equity firms faced difficulties exiting investments due to valuation gaps from 2023 interest-rate hikes. Many resorted to continuation vehicles or delayed exits. However, by Q3 2025, deal values in PE surged over 100% relative to Q2, driven largely by large European assets and cross-border deals. Infrastructure, renewables, utilities, transport emerged as resilient, long-term areas of investment. [1][6]

Outlook & Signaling Toward 2026
Dealmakers are generally bullish for 2026 in Europe, expecting stronger IPO activity, M&A momentum, and more exits as financing costs decline and pipelines mature. Regulatory steps—UK listing-rule reforms, changes to FTSE indexing thresholds, the EU’s Listing Act and Common Prospectus—are expected to gently lift the markets. [1][2][8]

Risks & Caveats
However, sharp headwinds remain: political uncertainty (especially post-election in UK, EU policy direction), inflation pressure, sluggish or late central bank rate cuts in Europe, and low post-IPO returns relative to U.S., which may push European issuers to list abroad. Liquidity in European equity markets is still weak, particularly in the UK, with median IPO sizes sharply down. Strategic missteps by banks could lead to overcapacity in ECM or PE advisory roles if 2026 fails to meet projected momentum. [4][1]