European and UK Equity Capital Markets Review March 2026

• Despite an initial strong start in 2026, equity markets have weakened in March on heightened geopolitical conflict, concerns of a private credit bubble and a sell off in Big Tech. The headlines in March have been dominated by the Middle East war and the closure of the Strait of Hormuz which has disrupted global energy supply substantially and put a material dent in the 2026 global outlook. Even with a reasonably prompt end to the conflict, it is expected that the supply shock will take some time to work its way through the system.
  
  
• As a result of the conflict, Brent crude prices hit a peak of $119.50 per barrel on 9 March (currently at $103.5 per barrel) and spot UK gas prices rose to 180p per therm (currently 127p). Central banks are expected to respond to higher price pressures idiosyncratically, and whilst prior to the conflict, the market had been expecting further rate cuts in the UK and US, our Economists now expect rates to be left on hold for 2026. In the Eurozone, rates are deemed to be in “neutral” territory already and the jobs market is tighter and therefore, the ECB may raise rates to ward off the inflation threat.
  
  
• Whilst many comparisons to the energy crisis post the initial invasion of Ukraine have been drawn, it is important to note that the world stands in a very different place to 2022. This time, prior to the Middle East conflict, inflation in the US and the UK looked to be heading towards the 2% target, with rates expected to fall as a result. For 2026, mildly restrictive policy rates and higher unemployment rates mean there is far less need or appetite for the central banks to significantly raise rates.
  
  
• In the UK, economic data has shown a mixed start to the year. GDP flatlined in January, but 2025 growth was revised up by 0.1%pt and now reported as +1.4%, a slight strengthening relative to 2024’s +1.1% growth rate. The household saving ratio moved up materially from a (downward revised) rate of 9.1% in Q3 (previously: 9.5%) to 9.9% in Q4, as household income growth outstripped spending growth. At its most recent peak in Q4 2024 it was 11.1%, but the latest rate is still historically high and far above the 5.4% it averaged in 2022 when the energy shock from the Ukraine war hit. UK CPI remained at 3.0% for February, although we note this predates any impact from the conflict.
  
  
• Geopolitics has dominated headlines through March, with inflation uncertainty persisting and expectations for global growth moderating. Other significant themes are strains within the Private Credit industry, particularly in the US as redemptions accelerate in several high profile “semi-liquid” funds amidst concerns around underwriting quality against a softening macro backdrop and markets’ ongoing adjustment to the advance of AI adoption.
  
  
• Despite the market volatility, ECM volumes held up well in Q1 with ECM issuance of $43.3bn for 2026 YTD, above the 10-year average. In the final week of February into the first week of March alone there was several $1bn+ accelerated transactions.  European IPO activity was strong through January and February, with a sector bias towards energy and defence. Whilst the Middle East conflict has delayed some processes, there remains a healthy pipeline for H2. The US is expected to see strong IPO volumes this year, with SpaceX, OpenAI and Anthropic all rumoured IPO candidates. In the UK, ECM activity is also off to a strong start, with a significant pick up in deals in 2026 vs 2025.
  
  
• Investec has seen a notable pick up in ECM activity in March, with a £1.9bn accelerated placing for Rosebank to fund two acquisitions and an £85m issue for Videndum to support a broader refinancing. Both raises saw significant demand and were oversubscribed despite the market volatility. Notably for UK markets, Rosebank’s fundraise represents the largest M&A-related primary Accelerated Bookbuild in London in over 20 years, demonstrating the depth and global relevance of UK equity markets.
   

• Equity markets had begun 2026 well, with Europe continuing to outperform the US. Following the outbreak of the conflict in the Middle East, global markets sold off sharply, particularly following sharp moves upwards in the oil market as a result of the closure of the Strait of Hormuz.
• Elsewhere in the market, AI and growth stocks sold off over increasing concerns regarding the levels of capex expenditure and fears of a “tech bubble”. Increased concerns of a “private credit” bubble had also introduced rising volatility ahead of the war.
• Whilst the FTSE 100 remains up year-to-date due to its defensive sector skew and significant Energy weighting, most other equity indices have sold off sharply amidst rapid and broad-based derisking.
• As such in the UK for March, the more domestically focused FTSE 250 has underperformed its more internationally exposed FTSE 100 counterpart finishing the month down 10.8% and 6.7% respectively. The FTSE AIM 100 closed down 14.0% and FTSE Small Cap down 10.4%. Elsewhere in March, the Stoxx600 was down -8.0%, S&P 500 down -6.2%, Nasdaq down -4.8% and Russell 2000 down -5.2%.
   

• US equity valuations had seen a strong recovery post-’Liberation Day’, driven by a strong performance of Big Tech, but Europe’s rally into the end of 2025 saw the valuation gap reduce. Whilst the headline valuation differential between US and UK / EU equity markets remains significant, after adjusting for growth (and sector skew therefore...) that differential significantly reduces.
• In 2026, US Big Tech valuations have come under pressure as investors have grown increasingly concerned over large capex commitments and higher costs. There was increasing rhetoric in the market regarding an AI bubble, and as such there has been a movement of money away from the “crowded” tech trade.
• Whilst UK equity market valuations do trail those in the US, adjusting for growth it is arguably fewer high-growth opportunities rather than an inability to value growth that drives the differential.
• All global indices have been impacted by the Middle East conflict, with a contraction in valuation multiples. Coupled with the sell-off in Big Tech, the valuation gap between the US and the rest of the world has narrowed. UK indices remain close to or below long-term averages and look attractive on a historic basis.

• UK February CPI inflation held steady at 3.0%, in line with consensus expectations. Service sector inflation eased to 4.2% from 4.3%. Core inflation came in above consensus at 3.2%, vs 3.1%, and up from January’s 3.1%.
• Higher energy prices pushed up Eurozone inflation in March to 2.5% from 1.9%, whilst core fell to 2.3%. In the US, CPI inflation for February remained at 2.4%, with core inflation coming in at 2.5%.
• The impact of higher energy prices due to the Middle East conflict will start showing up in the March print, however, as regards its ultimate effects, much depends on the length of the conflict, and the corresponding impact on not just energy prices but food and wider second-round effects. There is also the question as to how consumers fare in the face of these price rises, especially at a time when, unlike the UK, the US household saving rate is historically low, implying a shallow rainy day fund.
• Headlines indicate that central banks are closely watching the conflict in the Middle East and the associated impact on inflation and measured adjustment of policy may be warranted. Economists have pushed back expectations of rate cuts this year in the UK and US.

• After a turbulent year in 2025, investor sentiment coming into 2026 was strong, with investors remaining overweight Europe and the majority of investors expecting Europe to outperform the US over the next 12 months. This sentiment was aided by expectations of resilient GDP growth and bullish profit forecasts.
• Following the outbreak of the conflict in the Middle East, geopolitics has risen to become the biggest tail-risk for investors, leading to a sharp markdown in European growth prospects. While recession concerns remain off the table, the proportion of investors expecting an acceleration in growth has dropped sharply from 74% to 29% and 54% of respondents see European growth flatlining.
• Despite a less bullish outlook for European equities, concerns about reducing equity exposure by too much (‘FOMO’) has been overtaken by concerns around reducing equity exposure by too little, a net 36% of respondents still see upside for the market over the coming months (down from 67% previously), while a net 71% still see upside over the next year (89% previously).
• Investors bullishness on Europe has diminished moderately from February’s survey, due to its perception as being more exposed to negative effects from the Iran war. This reflects Europe’s lower energy security and higher inflation risk versus the US. The US has also seen some (modest) flight to safety into the dollar.

IPO issuance in Europe

• US$856m raised from 12 IPOs in March 2026 across Europe, with an average deal size of US$71m. There were 5 IPOs greater than US$50m including German defence manufacturer Vincorion ($345m), German naval engineer Gabler Group ($154m), Norwegian marine technology company General Oceans ($108m), Cypriot shipping company Pelagic Credit ($58m) and German industrial group ARENIT Industrie ($54m).
• So far in 2026, CSG’s IPO is most notable due to its size, signifying the largest European IPO since Porsche in 2022 (including full exercise of the greenshoe), and a powerful opener for European IPO markets in 2026.
• In 2025, there were 49 IPOs greater than US$50m, raising $17.8bn in total, with an average issue size of $363m (vs 47 IPOs in 2024, generating $17.9bn, with an average of $381m). Most core European IPOs had traded higher post issue creating investor confidence, however heightened volatility since onset of Middle East conflict has unwound much of this performance.
• Elevated volatility in 2026 has seen shorter execution windows to allow issuers to mitigate market risk. Despite a strong start, widespread de-risking since the onset of the Iran war has seen investor risk appetite reduced and some processes delayed.
• Despite near-term uncertainty, the European IPO pipeline remains healthier than 2025, with a number of flagship assets preparing and monitoring market conditions / execution windows. Defence, Energy Transition and Insurance remain key themes and are well represented within the pipeline. UK IPO activity has yet to kick off in 2026, with a delay to several transactions due to the conflict driven volatility.

• Rosebank has agreed to acquire MW Components and CPM, both US-based market-leading industrial businesses currently owned by funds managed by American Securities LLC, for a total consideration of c.$3.05bn on a debt and cash-free basis. This reflects standalone enterprise values of c.$950m for MW Components and c.$2.1bn for CPM.
• The Transaction represents the next major step in Rosebank's proven "Buy, Improve, Sell" strategy for creating shareholder value following Rosebank's successful acquisition of Electrical Components International ("ECI") completed in August 2025, and underscores management's commitment to creating shareholder value through transforming high-quality industrial businesses in the US and Europe.
• Acquisition funded through a fully underwritten Institutional Capital Raise of approximately £1.9bn.
• Investec underwrote £507m in relation to the equity transaction.
   

• Comprehensive refinancing: £85m fully underwritten equity raise (c.£78.9m net proceeds), debt for equity conversion and debt repayment and restructuring
• Upsized raise: £70m to £85m on strong institutional demand
• Use of proceeds: repay £50m existing RCF & £6m fees related to lender process; balance to increase liquidity and headroom
• Debt for equity: Equitisation of £23m of existing RCF by Polus Capital
• Debt actions: £60m of ongoing debt facilities²
• Pro forma outcome: £111.7m reduction in pro forma net debt (to £31.2m, incl. £25.8m finance leases)
• Share consolidation: Shares will be consolidated 1-for-200 (i.e., every 200 existing shares become 1 consolidated share) pre-Admission
• Offer price: 270p per New Share (1.35p pre-Consolidation) (87% discount to current share price)
   

• Approximately 82% of the money raised came from existing holders
• Aberforth (20.6%) and Alantra (24.0%), the two largest holders, provided voting and subscription irrevocable undertakings for £19m and £22m respectively
• Harwood (6.0%) provided a voting irrevocable, and BGF (3.1%) gave an LOI
   

• Material deleveraging and simpler capital structure
• Supports wide-ranging self-help measures already conducted:
  • restructured into two divisions;
  • streamlined portfolio and footprint;
  • reduced inventory and headcount; and
  • delivered £15m FY25 savings (c.£19m run-rate) with £8m targeted in 2026
• Board expects strong revenue growth from new products in FY26; expectations unchanged
• Medium-term target: >£350m revenue and mid-teen EBITDA margin

A comprehensive refinancing delivering material deleveraging and a prudently capitalised platform to support the Group’s go-forward strategy