A scare in markets last week served as a reminder of the fragility of global equities. In this febrile environment, ECM investors focus more on the names and vendors that have worked for them in the past.

The Nasdaq finished Friday with a 4% drop over the preceding five days; the S&P 500 had fallen by around 2.2% over the same period. Europe’s STOXX 600 was down by 1.9% over the week.

This mini market meltdown crystallised fears over valuation bubbles around artificial intelligence, leading investors to sell down positions at scale.

But even on bad days, good deals can still get through.

On Tuesday, 4 November, a consortium of investors sold a EUR 936.9m stake in French car leasing business Ayvens in a clean-up trade. The transaction flew across the line, despite a day of big losses on European and US stock markets.

The transaction was the fourth time the consortium has sold down this year, with the stock trading up 24% between the offer price on the first sell-down in May this year and the close before the launch of the final clean-up deal.

“The stock had performed really well and had risen significantly after the last earnings,” said a banker close to the deal. “The street had seen the previous transactions had all been executed carefully to leave some money on the table.

“This meant there was a load of reverse interest which we went out and engaged with; originally we looked at a smaller size but there was so much demand we were able to do the clean-up.”

The success of the Ayvens trade on a day that US stocks felt the full force of gravity – the Nasdaq closed around 2% lower on 4 November – shows what a bit of goodwill can buy you.

Not only were the sellers able to shift their entire 10.65% stake, but they were also able to do it at a discount of just 4.68%, for a ratio of just -0.44x to the size of stake sold, as tracked by Dealogic’s Price of Liquidity metric. This was the tightest ratio of all the sell-downs this year, showing investors had confidence in taking the stock at a tighter discount, given the money already made this year.

A similar example of a seller that can deal in subpar markets is Swedish private equity giant EQT, which sold a CHF 2.6bn block in Zurich-listed portfolio company Galderma on 28 October.

The deal was the sixth time that EQT has monetised since it listed the business in a mostly primary IPO in March 2024. Every time EQT has come to market, it has left a little on the table, including the IPO, where it took a substantial discount to its main peer at the time, Paris-listed L’Oréal.

The sponsor has continuously sold up at higher prices, making a huge return on the asset. EQT and its two co-investors, ADIA and Auba Investment, have monetised just over USD 12.3bn from Galderma sales and retain a 24.7% stake in a business worth CHF 34bn (USD 42bn).

The consortium bought the business for around USD 10bn in 2019.

Source: Dealogic

“There aren’t many sponsors as long-sighted as EQT is on Galderma,” said a second ECM banker. “Even to the extent that every time there is a block, I get messages from other private equity firms confused about the money being left on the table.

“The only thing I can respond with is to tell them to look at the strategy, what it’s achieved, and the billions it’s been able to sell so quickly at ever higher prices, but I am not sure the message gets through.”

EQT was even able to monetise a CHF 1.3bn stake of the business in March, when markets were being rocked by an increase in global trade tensions in the run-up to Liberation Day.

An investor called Galderma a “remarkable case study” showing what private equity can achieve when trying to maximise long-term returns, and not just the strike price, at IPO.

Bear market practices

So markets don’t have to shut when volatility is higher, but that’s not to say sellers don’t also get bitten by the caution bug. Even some block trades are being held back as market turmoil rises.

“There is strong demand from investors for blocks, but issuers are a bit more cautious,” said a third ECM banker. “People are in wait-and-see mode.

“There is still volatility in the market which is seeping in.”

Block trades, which are quick to market, more liquid, and easier for investors to model, have always been an easier sell than IPOs when volatility spikes.

However, buysiders speaking to ECM Pulse throughout the year have been clear that well-structured listings in good businesses are possible, even when equity indices look viciously bearish.

“At the moment the music is still playing,” the investor noted while acknowledging that most in the market expected the mood to turn sour at some point given risks over the AI bubble, macroeconomic weakness, and concerns over private credit.

There is a strong deal pipeline for 2026, including large London IPOs for HG Capital-backed Visma and EQT-owned veterinary business IVC Evidensia. These are just two of a host of popular and highly anticipated listing candidates for next year.

These could still get away, even in a tougher market, the investor said.

“I would hope for the right stories and right situations, there will always be a market, although for less high-quality stories, things could be tricky,” the investor said. “A good company can come in any market as long as the quality is high and the price is reasonable.”

Should EQT try to brave a bear market and bring IVC Evidensia in less than perfect conditions, its reputation built over the Galderma sell-downs will likely give it a boost, where other sponsors that have not been so foresighted might fall at the first hurdle.

In terms of structuring transactions so investors leave hungry for more down the road, some sponsors and private equity firms simply “don’t get it,” said the first banker. This short-termism, though, is rarely helpful, and investors have been known to add on an even greater discount to transactions coming from PE funds that have burnt them in the past.

Those that do “get it” should be confident in being able to still do business throughout next year if they want to, even if bearish grumbles become louder roars.