Quiet equity, stronger bond market

In 2025, the Estonian capital markets have so far continued the trends that first emerged in late 2023 and 2024 – almost complete lack of newcomers to the equity market, a somewhat more active bond market and elevated activity in terms of takeover bids and delistings.

Nominally, the result of 2025 in numbers is marginally better than in 2024 – Nasdaq Tallinn First North market had one IPO (Primostar Group) as opposed to zero IPOs altogether in 2024 and so far 10 public bond offerings have taken place, compared to 7 in 2024.

On the other hand, 2025 has seen the reduction of the Baltic Main List by the transferral of PRFoods to the Secondary List, as well as by a number of takeover bids.

The wave of takeovers and delistings

The takeover bids trend started in 2024 with voluntary bids for Tallink Group and Nordic Fibreboard, related to intragroup restructurings or changes in ownership rather than delisting. In 2025, the takeover and delisting of Enefit Green, a green energy subsidiary of Eesti Energia, was completed. Enefit Green’s 2021 IPO was the largest ever in Estonia, with more than 60,000 retail investors, so the exit of such a big player is a significant backlash. This was somewhat alleviated by the bond issue of its parent Eesti Energia, marking its debut on the local capital markets and providing investors an alternative investment opportunity, hopefully helping to keep these investors active. The trend for taking listed companies private continued in November when the intention to acquire the shares of Ekspress Grupp via a voluntary takeover bid was published, with an aim to delist the shares following the successful takeover.

Geopolitical risks and the consequences of tax uncertainty

The wave of takeovers and delistings reflects the general market sentiment. The global geopolitical and macroeconomic situation has become increasingly uncertain. For the past five years the world has seen significant ruptures – starting from the pandemic and followed by the war in Ukraine and as of lately by the import tariffs imposed by the USA and the unpredictable nature of Trump’s administration in general. In Estonia, the global uncertainty has been exacerbated by sporadic tax changes. Until recently Estonia had a simple and foreseeable tax policy, but in recent years this has shifted from straightforward tax increases to more complex solutions such as a proposed security tax effectively introducing corporate income tax, which was later reverted by the new government. All these developments have led investors to seek more stable instruments, as evidenced by the continuing boom in bond offerings, mostly driven by local credit institutions and, more recently, by real estate companies (such as Liven, which issued the first Green Bond in Estonia, as well as Invego, Everaus and Arco Vara). In light of the reduced interest in equity instruments, issuers increasingly weigh the costs and benefits of being listed, which regretfully has led to a number of exits from the market.

Public company burdens and the auditing bottleneck

From the issuer’s perspective, being a public company entails significant administrative obligations. As a positive recent development, the envisaged marked increase in obligations – complete ESG reporting – has been halted and subjected to comprehensive review under the Omnibus package. However, the auditing obligation has become increasingly difficult for listed companies to fulfil, partly due to the increased workload of auditors and because of recent changes in international auditing standards. Auditing of annual accounts is an important factor in ensuring the reliability and validity of financial data published by issuers and thus plays a vital role in the normal functioning of capital markets. Any changes in regulatory requirements in that area have to be carefully thought through and this dilemma is unlikely to have any easy fixes.

IPO ambitions vs. market reality

There are renewed anticipations for privatisation of certain state-owned companies, which the government seems to consider. Furthermore, a few larger industrial groups and a unicorn have been talking about a potential IPO for years. Realistically, as long as the economic situation wobbles and major geopolitical crises remain unsolved, it is difficult to predict a new IPO-drome emerging in Tallinn any time soon. Potential issuers are hesitant and for the time being focus on streamlining their business processes and rely more on bank lending and private placements of bonds, a market that has gained momentum. The local capital markets are still struggling to attract foreign institutional investors (typically cornerstones of any significant IPOs), and local pension funds continue to allocate a very low share of their portfolios to domestic companies.

Listing act reform and easier access to capital

However, there have been several positive regulatory developments that seek to elevate the markets. The regulatory landscape in Europe and Estonia has been reformed to simplify raising capital from public markets. Amendments to the Prospectus Regulation (the Listing Act) simplify prospectus requirements. The new Prospectus Regulation, in force from 5 March 2026, also introduces a dual prospectus threshold under which member states can choose either 5 or 12 million euros in aggregate value over 12 months; based on the draft bill, Estonia is likely to opt for the higher 12-million-euro threshold, further incentivising the use of capital markets. In 2024, a new regulation of the Minister of Finance on the information document for public offerings entered into force for offerings below the prospectus threshold. Its wording is unified across the Baltics, enabling passporting for small-sized offerings, and it was first successfully tested by Primostar Group in its pan-Baltic IPO in spring this year.

Currently, the Estonian capital markets seem to be in a standstill, with market participants preparing for new growth. The 10% growth of the Nasdaq Baltic Benchmark index in 2025, compared to almost no growth in 2024, and the upcoming regulatory changes in 2026 (entry into force of the Listing Act) allow a cautious optimism. Global macroeconomic trends are increasingly difficult to predict; however, once some stability is achieved more steadfast growth is likely to follow and feed into the livening of the Estonian capital market. Market participants and regulation seem to be well ready for the new ride to start soon!