It’s tough to keep up. Forecasting the course of the Middle East conflict has defeated seasoned experts and markets have struggled to price such wild uncertainty. Sponsors such as EQT, Advent and Cinven have opted to sidestep the prediction game, instead laying out multiple pathways to best execute realisations in equity market windows as they emerge.

The wisdom of this approach looks self-evident this morning (23 March). No sooner had US President Donald Trump issued a threat to annihilate Iran’s energy infrastructure than he creates another plot twist in the last hour with the prospect of “a complete and total resolution” to Middle East hostilities.

In this maelstrom of market mayhem, equity indices have seesawed between red and green days as traders and algorithms struggle to price the impact of constantly changing fundamentals. Even now, does Trump’s latest intervention reflect alignment with Israel? Will a pause in US hostilities be reciprocated by Iran releasing its hold on the Strait of Hormuz? Might the ongoing settlement even ease Iran sanctions and bring more crude oil production into the global market, riffing off the Venezuela playbook?

Only a fool would stake a claim to outlook certainty in these circumstances, notwithstanding markets welcoming Trump’s overtures to Iran.

Brent crude has shot lower today but remains at USD 100/bbl, with disruption and price pressures set to work through for weeks and months to come, even if this really is the military endgame. The threat of flare-ups and Iran’s proven chokehold over Middle Eastern energy supplies have likely permanently increased the risk premium for a whole host of related commodities.

Given the only sure bet is ongoing uncertainty, private equity companies have introduced more optionality into their deal preparations, allowing for realisations in a range of scenarios, as demonstrated by sponsor stalwarts EQT, Advent and Cinven since the first throes of the hostilities at the start of March.

EQT goes big to remove Galderma overhang

Most emblematic of this approach is EQT’s huge CHF 4.9bn (USD 6.2bn) clean-up trade to fully exit Swiss skincare business Galderma after market close on 10 March.

According to several market participants speaking to ECM Pulse since the trade, this was a far larger sell-down than the market had anticipated.

EQT embraced maximum optionality to sell its entire stake in Galderma, after originally exploring a smaller deal, one source familiar with the effort said. He noted that several of Galderma’s other shareholders were pushing for EQT to remove any overhang on the stock.

The sponsor, keen to continue to protect its reputation as one of the most market friendly private equity operators in European ECM, was happy to oblige.

Alongside other Galderma shareholders selling down, EQT did not feel it wise to set up the hypothetically perfect as the enemy of the good. Unable to predict how long the conflict in the Middle East would run, EQT was happy to structure a transaction that would be mutually beneficial for Galderma, its shareholders and EQT.

Now the overhang of more EQT sell-downs has been removed, the stock can trade unencumbered at what is likely to continue to be a volatile moment for global stock markets.

EQT declined to comment.

Surprise dual-track shocks advisors

Meanwhile, Advent and Cinven have also been building optionality with a reported move to make its IPO preparations for TK Elevator (TKE) a dual track process, entering negotiations with Finland’s Kone, a key peer to TKE.

As ECM Pulse wrote at the start of the war, the conflict is likely to particularly impact TKE, which has a key interest in Saudi Arabia.

TKE is 15% owned by Saudi Arabia’s Alat and has entered a JV to provide escalator solutions across the country as part of the Kingdom’s ambitious Vision 2030 programme.

Given that the war has turned into an expansive regional conflict involving Iranian attacks on Saudi Arabia, TKE’s growth story might be called into question.

TKE’s IPO advisors were shocked by the sale talks, which for many came completely out of the blue.

The IPO remains in the works but the pivot to running a dual-track deal with a sale option alongside the listing now gives Advent and Cinven more optionality should Trump’s latest positioning falter and Middle East instability sustain deeper into 2026. Having options is the best way for GPs to show their eagerness to return capital to LPs – and indeed to execute in that direction.

PE positioning

Several bankers speaking to ECM Pulse this week note that other private equity firms are also likely shifting strategy on both listed portfolio holdings and IPO candidates.

The last time a global conflict caused such a severe and sharp rise in energy costs was in 2022 when Russia invaded Ukraine. In the wake of that conflict kicking off, PE-backed IPOs in Europe dropped off the proverbial cliff, with volumes of under USD 1bn.

After a slow 2023, private equity began making tentative returns to the European IPO markets in 2024, which continued through 2025.

With a huge pipe of PE-backed assets planned for 2026, this revival is now under threat as market participants run the rule on disruption in the Persian Gulf.

Source: Dealogic, European sponsor-backed IPOs

It’s worth noting the European IPO market remains robust for a narrow range of issuers, notably in the defence sector – as seen by the success of Vincorion, which closed its first day of trading on the Frankfurt Stock Exchange at EUR 18.70 a share 10% above its IPO issue price of EUR 17.00.

This clamour for European defence equities will also benefit the listing of Franco-German arms manufacturer KNDS, if it follows through on IPO plans this year.

The picture is far from rosy for other issuers.

Higher oil and energy prices are juicing supply costs, which will likely remain elevated even if hostilities wind up in the coming days.

Though it will be easier for central banks to apply the typical energy shock playbook of looking through commodity price hikes when setting rates, the best-case scenario still means the downward trajectory from the Federal Reserve and Bank of England is stalled. If Iran opts to continue restricting shipping volumes through the Strait of Hormuz, rate rises across both central banks and also the European Central Bank cannot be ruled out.

In any scenario, the spike in energy prices and general sense of a world unmoored is likely to dent consumer confidence, affecting any issuer that relies on discretionary spending habits.

“Plenty of sellers are looking at their plans carefully; we have seen that with the headlines on TKE,” said a banker. “KNDS will be fine – that is defence and people are queuing up for that, and there is plenty of stuff in Europe stuff going on from an industrials perspective, but the issue is how broadly this conflict may impact industries across Europe.

“People can’t make an assessment on forward earnings. Investors are happy to engage still, happy to meet, but are broadly giving no indication on size or value.”

There are a host of sponsor-backed businesses in the IPO pipeline for Europe in 2026. Uncertainty is kryptonite for market debuts.

“Everyone now needs a Plan B. Irrespective of the war, there was still an underlying gap in the IPO market between buyers and sellers,” said a second banker. “If you can find another PE or a strategic willing to pay a higher, or even the same, price as the IPO market at the moment, most will be tempted to take it.”

There are “so many random variables impacting businesses in ways that can be hard to foresee,” this banker added.

For GPs facing more pressure than ever to increase DPI ratios and return capital to LPs, maximum optionality will prove vital in the uncertain weeks ahead.