RBC Capital Markets’ U.S. Equity Capital Markets leaders share their perspectives on 2025's strong market performance and what lies ahead in 2026. Mike Ventura, Co-Head of U.S. ECM provides the macro context that underscored the year's resilience and positions the market for the opportunities ahead, while Joe Passaro, Co-Head of U.S. ECM and Global Head of ECM Syndicate takes a deeper dive into the structural shifts reshaping the ECM landscape—from surging IPO activity to evolving investor sentiment. Explore these insights for a comprehensive view of the forces driving capital markets and the strategic considerations for issuers navigating 2026, or drill down into sector-specific commentary with subject matter experts below.
Market Backdrop: Resilience and Momentum
2025 Takeaways
The U.S. equity market in 2025 demonstrated remarkable resilience and efficiency. After reaching all-time highs in February, markets experienced a significant test in April amid tariff concerns, yet recovered to all-time highs by mid-June within just 80 trading days. This swift recovery underscored the market's structural strength and investor sophistication in managing risk while maintaining upside participation.
The performance metrics reinforce this narrative. The year marked the fourth consecutive year of increasing annual equity issuance, and the S&P 500 achieved 15% or greater returns for the third consecutive year—a phenomenon that has occurred only twice in the past 25 years. Private equity sponsors also benefited from extended hold periods, which enabled significant asset scaling and attractive valuations. These indicators collectively demonstrate sustained investor confidence, continued attractiveness of U.S. equities and capital markets growth, and the momentum building toward robust IPO activity in 2026.
2026 Outlook
The convergence of healthy market structure and strong performance is expected to catalyze a significant renaissance for U.S. initial public offerings in 2026, particularly IPOs exceeding $1 billion. PE sponsors, having held portfolio assets longer than originally anticipated while scaling those assets substantially, are now evaluating exit strategies where IPO pathways appear more advantageous relative to minority stake sales or traditional M&A transactions. For example, in the industrials sector, from now until April, there will not be a week in which an industrials IPO is not testing the waters, marketing, or pricing.
Beyond traditional M&A and IPO activity, artificial intelligence will remain a crucial investment theme in 2026. While the public AI market is unlikely to represent a bubble, AI derivative trades—particularly within power and utilities and industrial technology—represent an interesting opportunity where a significant amount of issuance is expected to support a world that is clearly net short on power supply. Finally, consumer health metrics—encompassing financial health, spending patterns, and behavioral trends—will remain a closely monitored factor, as these elements significantly influence equity market direction and sentiment throughout 2026.
ECM Market Dynamics: Structural Transformation and Investor Positioning
2025 Takeaways
The Equity Capital Markets landscape underwent a significant structural transformation in 2025. While overall ECM volumes trended up about 16% in 2025, the makeup and complexion of those deals was very different than in prior years. The uptick in volumes was mainly driven by IPOs up 44%, and convertible offerings up 35%, while the products that carried the majority of issuance in 2022 through '24—follow-ons and block trades—were down about 10% in '25. Interestingly, despite '25 total deal count trending lower than those historical figures by about 23%, the average size per deal was substantially greater, about 87% in '25 versus the historical mean. Those results were most prevalent within technology, financials and healthcare, which all ranged up north of 100% over that same time period.
We saw that average deal size growing substantially, particularly in IPOs. The average IPO size increased about 70%, from $300 million to about $510 million in 2025. That is mainly driven by companies going public as sponsors have taken larger and larger companies private and held them privately longer.
Investor sentiment recovered strongly following April's tariff-induced sell-off, as institutions redeployed capital from sidelines during the second half's V-shaped recovery. While demand for high-quality companies remained resilient, performance diverged across risk profiles. Approximately 30-35% of the year's 122 IPOs finished below offer price, while only 8 exceeded 100%, indicating speculative sectors including crypto, quantum, and space tech underperformed relative to median outcomes.
2026 Outlook
The 2026 ECM market enters with exceptional tailwinds, anchored by a significant backlog of IPOs across a wide range of sectors. The structural shift toward larger, higher-quality issuances is expected to continue as sponsor-backed companies—held private longer and grown to larger scale—prepare for public debuts. Execution of these large IPOs in 2026 will maintain a clear focus on investor sentiment as a critical success factor.
Our year-end survey of over 100 major institutional investors revealed significant shifts in what clients are anticipating for the year ahead. Focus on growth over profitability increased dramatically—from 28% in December 2024 to nearly 60% by December 2025. IPO discount expectations also tightened considerably, with 40% of investors now viewing 12-15% discounts as appropriate versus the 15-25% range preferred one year prior. Additionally, technology retains its premier position for IPO investor interest, but healthcare has emerged as the most significant gainer, with nearly 40% of investors identifying it as having the greatest opportunity to outperform in 2026.
Sector perspectives:
Technology ECM Perspectives
2025 Takeaways
After a challenging three-year downturn following 2021, tech markets experienced a meaningful recovery in 2025 driven by powerful macro tailwinds. The economy demonstrated underlying strength and resilience, with inflation trending lower and interest rate conditions becoming increasingly accommodative – creating an ideal environment for growth investors and tech companies, which is expected to continue in 2026.
Despite these favorable macro conditions, artificial intelligence remained a double-edged narrative in 2025. While AI dominated market conversations and adoption accelerated across sectors, significant uncertainty persisted about whether investments would deliver measurable returns. Legitimate concerns about ROI dampened investor enthusiasm for many AI-focused companies. However, tangible ROI evidence began to emerge. Beyond a small group of infrastructure leaders, we're now seeing app layer companies across various industries and verticals deliver sustainable revenue expansion, increased customer spending, and workflows that show substantial improvement through embedded AI capabilities.
2026 Outlook
2026 represents a critical turning point where AI moves from theoretical promise to tangible value creation, representing a genuinely transformative moment for the AI trade and for the AI theme in the equity capital markets.
The outlook is further bolstered by supportive policy conditions heading into the midterms, which should act as a stabilizing force in broader markets. The tech sector will also experience a wave of marquee IPOs from companies that have scaled to unprecedented private market valuations. These dynamics will inject meaningful liquidity into constrained markets, refresh the investment lifecycle, and strengthen the entire tech ecosystem. While a crowded IPO calendar raises questions about market saturation and differentiation strategies, early indicators suggest the market has significant capacity to absorb this supply and provide needed liquidity for private market investors.
Healthcare ECM Perspectives
2025 Takeaways
Healthcare finished 2025 with a 12.5% gain, lagging the S&P 500 for the third consecutive year but recovering from 2024's 22% underperformance. Biotech was the star performer, surging over 35% and nearly 75% from April lows, with some specialist investors posting 50%+ returns.
Key drivers included the obesity trade's continued momentum—Eli Lilly became the first trillion-dollar market cap healthcare company on GLP-1 drug sales strength. Strategic M&A intensified amid new pipeline therapies and oral medications. China emerged as a major biotech innovation hub with increased licensing activity. AI use cases in healthcare expanded, but the sector currently has very little AI embedded value, apart from select value creation in cost savings and operational efficiencies. Future AI opportunities will be focused on drug discovery and clinical trials.
Concerns that weighed on markets failed to materialize to a large degree. FDA personnel turnover didn't disrupt drug approvals, and drug pricing pressures didn't harm sector performance. On the financing side, total healthcare issuance exceeded $56 billion with biotech leading. Confidentially marketed deals were common for smaller offerings to avoid volatility. Q4 saw companies leveraging one-day public bookbuilds to capitalize on strong stock price reactions to positive clinical data.
IPO activity was quiet—only seven biotech IPOs, the slowest since 2009—but biotech IPOs outperformed with a median 50% gain versus 13.9% overall. Growth MedTech and tools and diagnostics also proved to be areas of strength in the IPO market.
RBC served as bookrunner on the landmark Medline IPO, which raised $6.3 billion, with shares jumping 40% on day one and likely encouraging other PE-backed companies to go public. Private capital filled gaps, with healthcare technology venture funding steady at $25-30 billion annually and biotech private funding exceeding $20 billion.
2026 Outlook
Expect robust issuance and increased IPO activity as 2025 themes continue. Healthcare policy uncertainty exists around COVID-era subsidies, but accelerating M&A should drive investor returns and capital redeployment in small and mid-cap markets.
RBC's U.S. equity strategist recently upgraded healthcare to overweight, citing attractive valuations, strong earnings momentum, and sector positioning as a beneficiary of rotation away from the tech-AI trade.
Financial Institutions ECM Perspectives
2025 Takeaways
The U.S. financial services sector experienced a transformative year marked by explosive growth in investment-grade private credit—a structural shift that is fundamentally reshaping how credit is originated, distributed, and owned. This wasn't a cyclical trend but rather a lasting repositioning of the capital markets landscape. Institutional investors, including pension funds, insurers, and sovereign wealth funds, increasingly allocated capital to private credit, drawn by its yield premium over public investment-grade bonds combined with stable, predictable cash flows and lower credit risk. Banks played a critical role in facilitating this shift, recalibrating their capital frameworks and partnering with private credit providers rather than lending directly, with private credit becoming increasingly prevalent in financing M&A and corporate expansion.
Equity capital markets activity in financial services rebounded strongly, with $40 billion raised—nearly double 2024 issuance levels. The insurance sector proved particularly dynamic, completing seven IPOs and specialty PNC. RBC was an active bookrunner on multiple high-profile transactions, including Accelerant's $830 million IPO. In specialty finance, business development corporations remained selective with equity raises. Notably, RBC led Main Street Capital's successful MSIF IPO. Regional banks also tapped the market with 13 deals, driven by consolidation and regulatory capital needs. Across all segments, investor sentiment remained constructive and supportive.
2026 Outlook
Looking ahead to 2026, a pressing question for market participants is what will slow the momentum of investment-grade private credit growth if anything. Equity capital markets activity is expected to remain robust, with further bank consolidation anticipated to drive a sustained IPO and follow-on calendar in 2026. The insurance sector's momentum should continue as the pipeline refills with new specialty insurance opportunities, supported by strong investor participation and proven aftermarket demand. RBC's near-term deal pipeline is strong, growing, and diverse—well positioned to capitalize on the dynamic market conditions ahead.
Real Estate ECM Perspectives
2025 Takeaways: A Transitional Year for Real Estate
2025 proved a pivotal transition year for real estate, marked by measured activity yet meaningful improvements. While the REIT market finished essentially flat, the year delivered tangible silver linings. Benchmark interest rates declined, REIT bond spreads tightened, supply and demand dynamics remained largely balanced, and broader equity investor interest increased.
Healthcare REITs remained the standout performer, buoyed by superior earnings power and capital cost advantages. Senior housing-focused REITs were among the best performers and deal flow gained momentum in healthcare, data centers, and net lease properties. Critically, office fundamentals inflected in 2025, providing investors a safer entry point after significant 2024 headwinds.
RBC's real estate equity team earned the number two position in REIT equity league tables, serving as Financial Advisor on Sonida's $3 billion merger with CNL and Exclusive Advisor to Morgan Properties on a cross-border multifamily take-private. These transactions underscore how changing market dynamics are creating strategic opportunities.
2026 Outlook: An Increasingly Dynamic Landscape
The outlook for 2026 points to a significantly more dynamic landscape. Approximately $440 billion in dry powder across real estate private equity funds, combined with growing nontraditional capital interest, creates an environment where take-privates and large platform transactions emerge as major activity catalysts.
Activism is expected to remain a meaningful catalyst for strategic processes, while management teams focus on scale-driven revenue and cost synergies. There is a current gap between private and public valuations with best-in-class platforms, assets, liquidity and investment-grade balance sheets trading at double-digit NAV discounts. This valuation gap is expected to narrow through compelling opportunities across M&A, asset sales, and buybacks.
Digital infrastructure and data centers remain at the forefront of investor attention, while AI's impact on space utilization and labor markets will drive strategic positioning across the ecosystem. With declining interest rates providing additional tailwinds, robust equity capital markets activity and meaningful acceleration in REIT IPO activity is anticipated throughout 2026.
Convertibles ECM Perspectives
2025 Takeaways
The convertible market in 2025 delivered a landmark year, raising $117 billion of proceeds across 146 offerings—a 35% year-over-year increase versus 2024. Deal sizes expanded significantly, with the median deal size growing to $600 million and a third of all offerings exceeding $1 billion. This represented a fundamental shift, with larger, higher quality issuers accessing the convertible market as a core financing tool—a seismic change in the convert market.
Volatility was a key driver in 2025, performing as the star of the market and working heavily in issuers' favor. The average implied volatility climbed from 39% in 2024 to 44% in 2025, creating an optimal pricing environment. This higher volatility compressed coupons to historic lows and allowed issuers to achieve extremely high conversion premiums relative to historical context. Many issuers achieved significant debt cost savings versus traditional debt financing, creating substantial value for corporates.
Despite crypto issuers dominating headlines, the issuer base proved very diverse in 2025, with strong participation from all sectors and credit ratings. Both investment grade and high yield issuers experienced meaningful expansion in issuance volumes, establishing the convertible market as a true broad, multi-sector platform.
Investor demand remained strong, with secondary market performance proving spectacular. Convertibles returned approximately 17.8% in 2025, outpacing equities for much of the year. This strong aftermarket performance attracted institutional capital and validated the product. Mandatory convertibles also contributed meaningfully, with seven offerings raising $9 billion in 2025, including some of the year's largest equity capital raises, proving invaluable for issuers managing leverage profiles and capturing significant equity content from the rating agencies.
2026 Outlook
Looking ahead to 2026, favorable market conditions are expected to persist. The backdrop remains supportive, characterized by high volatility, elevated equity valuations, robust capital expenditure needs across key sectors, and secular tailwinds from artificial intelligence.
RBC is forecasting $80 to $100 billion of issuance in 2026—a slight decrease relative to 2025 levels, but still representing an extremely high volume of issuance. The convertible market has gained broad appeal across sectors and credit qualities, and the market backdrop continues to be extremely attractive for issuers.
