Private equity firms and multinationals are finding exceptional liquidity, and demand, for their listed holdings among equity capital markets (ECM) investors for their listed holdings in Europe, the Middle East and Africa (EMEA) last week, allowing vendors to monetise legacy holdings at attractive prices.

Significant sell downs in Siemens Healthineers [ETR:SHL] and Italian pharmaceutical firm Recordati [BIT:REC] lifted European ECM volumes. Interestingly, both deals were unconnected to lock-ups and, therefore, less predictable for investors.

The same tendency is also visible in the Middle East – last week’s large block in ADNOC Gas [ADX: ADNOCGAS] was the largest ever in the United Arab Emirates (UAE).

“Clients we speak to are realising that there are lots of options for them in terms of fundraising, and equity markets are now becoming a far more important part of that conversation,” said an ECM banker involved in the deal flow last week.

This liquidity has brought more issuers to market with larger transactions, meaning 2025 has been the best start to a year in terms of blocks volumes in EMEA since 2021.

Both corporate sell-down transactions and sponsor monetisation deals play into the theme of mega blocks that have been prevalent in EMEA for the last couple of years.

Unlike earlier sell-downs in Haleon [LON:HLN] and London Stock Exchange Group [LON:LSEG], each of the billion-plus blocks last week were relatively unexpected, without a well flagged lock-up expiry to prepare investors for an impending deal. This is a similar dynamic to another multi-billion sell-down in British American Tobacco [LON:BATS] in January.

The success of these deals shows a greater capacity for investors to absorb trades they are not on the lookout for and is another positive indicator of risk appetite.

Siemens [ETR:SIE] had somewhat teed-up the transaction last year via CFO Ralf Thomas, who noted that the company was “not religious” about its 75% holding in Healthineers and might consider a 5% stake sale to help fund the acquisition of Altair Engineering [NASDAQ:ALTR].

Demand from investors led to the deal being increased in size. The final stake sold was 2.35% with the German conglomerate prevented from any more sales until 25 May.

In the case of the ADNOC Gas sell-down, parent Abu Dhabi National Oil Company (ADNOC) was able to sell, by far, the largest secondary block trade in the history of the UAE, according to Dealogic data. The deal was oversubscribed over 4x and helped increase ADNOC Gas’ liquidity, the stated reason for the deal.

The Recordati deal also fulfilled a unique need for seller, given that CVC [AMS:CVC] holds the Italian pharmaceutical company in its 2017 European CVC European Equity Fund VII.

The sponsor acquired a 51.82% stake in Recordati in July 2018, at a USD 4bn valuation, according to Mergermarket data. Andrea Recordati remains chairman of the board.

The Italian firm has been the subject of feverish M&A speculation over the past few months. But strong performance has lifted Recordati’s share price to a point where M&A might prove challenging.

CVC was able to start monetising its investment through ECM, raising EUR 584.85m from a 5% stake sale, at a USD 13bn valuation, providing it with capital to return to its limited partners (LPs).

“CVC gets it,” said the ECM banker. “Other sponsors do as well, but many are so focused sometimes on size and quantum that they miss the chance to begin a gradual process when the window is there.

Everything is bespoke and there is no one size fits all approach to exiting these assets.”

Sponsors turn to equity monetization, IPOs also in sight

CVC’s decision to begin selling down its equity in Recordati, rather than an M&A option for its stake, is indicative of a haste among sponsors to start reducing stakes in their listed, and unlisted, legacy holdings.

Bankers say that other sponsors have been taking a similar approach, closely examining their assets in legacy funds.

“In our conversations with the sponsor community, we are seeing an increased appreciation that equity capital markets are a tool they need to have in mind in monetisation and returning LP capital,” said a second ECM banker.

The first banker noted that his firm had also increased conversations with sponsors on assets sitting in some of their older funds.

Both bankers pointed to situations where sponsors are sitting on assets listed in 2021, which are finally trading up after torrid trading and the first banker noted that they were in deep conversations with sponsors on selling down assets which were listed even before that.

Deal activity will not just come from block trades, with sponsors expected to be a driving force in the IPO market this year.

Both bankers, plus a stock exchange executive in conversation with issuers, noted an expectation of a far busier year for private equity-backed listings, building on from 2024 deals like EQT’s sell-down in Galderma [SWX:GALD] alongside the IPOs of BC Partners-backed Springer Nature [ETR:SPGG] and Polish retailer Zabka Group [WSE:ZABKA], owned by CVC.

Europe’s largest IPO of the year so far has been the listing of Spanish travel technology platform HBX Group [BME:HBX] and two of the largest IPOs in the pipe for 2025 are sponsor backed; the listings of German pharmaceutical company Stada, owned by Bain Capital and Cinven, and Dutch telecom business Odido Netherlands, backed by Apax Partners and Warburg Pincus.

But the IPO market remains far from easy. The debut of HBX was a rocky one, with the stock falling over 10% on its first morning of trading before recovering to around the IPO price in the following days.

The deal proved that there is still a fragility in the European IPO market, with investors conscious of wider equity market volatility and laser focused on quality and size.

Not all sponsor-backed IPOs are equal, some are certainly more equal than others.