Private equity firms are readying several large portfolio companies for IPO in 2026, and investors are keen on engaging – at the right price. But if geopolitical tension converts into risk-off sentiment, sponsors may opt for bilateral sales instead.

Tariff tensions are back on the agenda after US President Donald Trump unilaterally decided over the weekend to levy trade penalties on several European nations, including the UK, France, Germany and Denmark, over their support for Greenland’s territorial integrity.

Last week, a number of European countries began to send military assets to Greenland, an autonomous territory within the Kingdom of Denmark.

The deployment was ostensibly undertaken to demonstrate European willingness to defend the territory and the wider Arctic region against a potentially hostile Russia or China. However, this positioning has been interpreted as an act of hostility against the US; President Trump has been talking up his determination to acquire the territory, perhaps by military force if necessary. From a European perspective, it’s not for sale.

As ECM Pulse wrote last week, there are a cohort of European defence names seeking to go public in 2026, including Czechoslovak Group (CSG) and Franco-German munitions business KNDS.

These listings are likely to be aided by the tensions over Greenland, CSG’s main peer Rheinmetall is up almost 3% on the morning of 19 January, in reaction to the escalation. Any further fracturing of the US-European security alliance will increase political appetite this side of the pond to increase strategic autonomy.

Most of Europe’s IPO pipe, however, won’t benefit from such unprecedented transatlantic hostility. The FTSE 100 (down 0.51%), the CAC 40 (down 1.51%), the DAX (down 1.37%) and Copenhagen’s OMXC 20 (down 2.64%) have all taken a knock this morning. US futures are also deep in the red, though stateside bourses will remain closed for Martin Luther King Day. Gold has jumped to another record high of USD 4,700/oz.

That said, most prospective listing candidates have some breathing room. CSG is the only major IPO in the market, with most of Europe’s big deals being held until the “Easter window” at the end of 1Q.

This gives time for the tensions between Europe and the US to calm before the first big IPO window of the year.

There is a lot riding on this year’s IPO market, particularly for sponsors looking to engineer some sizeable exits.

Sponsor scale, large listings

There is a cohort of large sponsor-backed businesses lined up for public markets this year. These include HG Capital-backed Visma, EQT portfolio business IVC Evidensia, and Advent and Cinven-controlled TK Elevator.

There is also Swiss airline catering business Gategroup, owned by Temasek and RRJ partners, alongside Dutch telecommunications business Odido, backed by Apax and Warburg Pincus.

“Investment committees are confident in considering an IPO exit again – to be honest it kills deal flow when the market is shut. An IPO really must be part of the exit toolbox for every GP,” said a sponsor coverage banker.

Source: Dealogic

The recent track record of PE IPOs has also been encouraging.

The EUR 3.6bn IPO of Verisure by Hellman & Friedman (H&F) last September in Stockholm, followed by the same sponsor’s mammoth USD 7.1bn listing of Medline in New York, provided GPs with a model for running a successful, bumper IPOs – both are trading above their IPO prices.

These follow on from the success of EQT’s staged exit from Swiss skincare conglomerate Galderma, which the sponsor listed in 2024 before undertaking several well executed block trades.

Even this side of the pond, “sponsors can do really big deals now, if the valuation is compelling enough and the business is high quality enough – the narrative of having to do smaller listings is changing and the depth of the European capital markets are huge,” an ECM investor noted.

Bilateral bid playbook

While listing fundamentals are primed for success, the market needs to be open for big European IPOs to be priced and economic warfare between Europe and the US over Greenland could be just the thing that shuts markets. The European Union is reportedly mulling EUR 93bn in retaliatory tariffs against the US.

An ECM banker noted that investors have been extraordinarily good at ignoring geopolitical risks, like tensions in the Middle East or even the surprise US extraction of Venezuela’s president Nicolás Maduro earlier this month.

But tariffs hit corporate bottom lines and investor profits, especially given the US is Europe’s largest export market. While some businesses may find a way through if they are not particularly export heavy, the threat to the global economy and markets in general remains a serious concern.

And several potential IPOs are already likely to go to a bilateral sale rather than an IPO.

One of these is Mobile.DE, the German vehicle marketplace, owned by Blackstone and Permira.

“We’ve met the business but the sense we get in general is that the focus is likely to be on a sale,” said a second ECM investor. Possible bidders for Mobile.DE reportedly include Prosus, GIC and fellow sponsor EQT.

Permira also has some recent success completing a bilateral sale process for Golden Goose, the Italian luxury shoemaker it attempted to list in 2024. In December, Permira announced a deal to sell a majority stake to HSG, finally realizing some of its investment in the business.

Unless a diplomatic fudge over Greenland emerges soon, sponsors are likely to be even more incentivised to pursue quick sales over the market exposure risk of an IPO.

There is already a track record for this approach.

In 2025, several IPO candidates were eventually sold to private bidders, often on the cusp of listing processes being launched. German pharmaceutical business Stada, Portugal’s Nova Banco, the German division of utilities company TenneT and German neobank OLB all went on this journey.

“There are going to be some surprise late-stage bids coming in, even for some IPO assets where there is more of a 2027 timeline than a 2026 one, said a second sponsor coverage banker, noting that his target list included several businesses publicly on the IPO track. “We have done some great deals when an IPO process is about to be launched when a bilateral bid comes in.

“When we go to investment committees, they tell us to take the bilateral offer even in cases when the deal team there weren’t interested.”

The ECM banker noted that he was more aware of the possibility of losing good IPO businesses to late-stage private offers than at any other time in recent year, with competition for high quality European businesses heating up.

In a situation where equity markets are in the red, with IPO processes battered by volatility – be it from Greenland tensions or some other unforeseen geopolitical buffer – even sponsors with assets they feel are good enough to list might simply decide to bank their profits and take the best sale offer they can get.