European corporates are increasingly greenlighting equity raises to finance growth through M&A and there seems to be a remarkable pool of investors willing to support these plans.

Around USD 4.5bn of primary follow-on paper was been priced in Europe as of 12 June, making it the highest value month for primary raises all year already, according to Dealogic.

Source: Dealogic

More is expected to follow as companies begin to action more equity placements to fund inorganic expansion.

Italian firm Italgas will wrap up its EUR 1bn rights issue on 19 June, with the proceeds being used to repay a bridge credit facility used to finance the acquisition of 2i Rete Gas.

At the beginning of the month, UK-listed vehicle Rosebank Industries raised GBP 1.2bn to fund the acquisition of Electrical Components International (ECI) for an enterprise value of around USD 1.9bn.

The deal was the largest UK transaction of the second quarter so far and the largest listed follow-on on London’s junior AIM market in well over a decade.

Investors are keen to put money to work, but broader geopolitical uncertainty means that they are keen to top-up in stocks they already own and like as a defensive move, an ECM banker said.

“In volatile times, you tend to back horses you know vs accruing large cash balances you then can’t redeploy,” the banker said.

Rosebank, an acquisition vehicle listed on AIM in 2024 by the former management team of Melrose, is, for example, backed by several large institutional investors including BlackRock, Permian Investment Partners, Artemis Investment Management and Norges, according to shareholder information on the company’s website.

Affiliated Managers Group, Aviva, Schroder Investment Management and Jupiter Fund Management are also listed among its institutional shareholders according to Dealogic’s institutional holdings data.

Several other ECM bankers have been talking up large M&A pipelines for their clients throughout the year and the reliance on equity market financing to support several of these deals.

Some of this activity has been delayed due to the volatility around US President Donald Trump’s “Liberation Day” tariffs in April, with companies unsure over whether to push ahead with inorganic growth, and financing it, when the near-term business environment remains so uncertain.

However, a rebound in equity indices in May and market momentum continuing in June has prompted some corporates to take the step to complete M&A and hit the market for equity financing.

“We have a fair bit of primary coming through the pipe soon and its mainly M&A-led,” a second ECM banker said.

Take the window

As is the case with secondary block trades, corporates have a clear window now to launch equity financing deals. But that window might not be open forever.

Corporate primary raises take longer to line up than secondary sell-downs but once a deal is in place and a trigger ready to be pulled in the transaction they can, in many jurisdictions, be done quickly overnight.

In London, for example, issuers can raise up to 20% of market cap overnight without pre-emption rights, making it a particularly friendly jurisdiction for M&A financing deals. As was shown by Rosebank, the UK is also highly liquid with investors willing to put big sums to work even on the junior market.

But volatility is never too far away.

At the end of last week, conflict broke out between Israel and Iran as the former pre-emptively struck out to disable the latter’s nuclear production facilities.

Markets have been choppy since as the ramifications of a wider conflict between the two regional powers is assessed by investors.

Also, US President Trump’s trade negotiations with China have not yielded a market friendly outcome yet and there is a chance wider global trade turmoil could increase again once a pause in the imposition of US tariffs ends on 9 July.

There are also growing fears over the rising cost of US debt, juxtaposed alongside President Trump’s “Big, Beautiful Bill” set to add trillions of dollars to the US debt burden over the next few year, at a time when demand for US Treasurys appears to be in decline.

A bond market “crack” as JPMorgan CEO Jamie Dimon predicted at the end of May, could damage global equity sentiment again and cause markets to shut. It also lessens the ability of the Federal Reserve to cut interest rates.

Rising Treasury yields are also likely to raise longer term debt financing costs, putting more pressure on company balance sheets. Reducing leverage through equity raising can help alleviate pressure on a business.

While debt reduction raises are less popular with investors, and shareholders, than M&A financing, companies that go early, and act proactively, will have an advantage over those that wait until they hit troubled waters.