Siemens sale

Excellent prognosis for Healthineers IPO

File: Siemens AG To Sell Healthineers
Just lie back and think of the money. Source: Bloomberg

Buffeted by threats of a trade war and market jitters over the political gridlock in Italy, Siemens set an unexpectedly low target price range for its flotation of its medical technology unit. But investors don’t seem deterred.

Shares in Healthineers are already two times oversubscribed ahead of Friday’s IPO with Siemens aiming for an issue price of €28 ($34.7) to €29, financial sources told Handelsblatt. That would be in the middle of the hastily adjusted price range of €26-31 the company announced following President Donald Trump’s announcement of import tariffs and the inconclusive Italian elections on March 4.

But it’s still shaping up to be one of the five biggest IPOs ever in Germany. Siemens plans to sell up to 15 percent – a maximum of 150 million shares – of Healthineers, whose products include X-ray, CT and MRI scanning machines.

With a volume of up to €4.65 billion, the issue is too big for institutional investors to ignore.

Global co-ordinators Goldman Sachs, Deutsche Bank and JP Morgan want a good mix of long-term investors and hedge funds to ensure ample liquidity in the stock. Interest has been especially strong in the US, home to two rivals of the world market leader — Johnson & Johnson and Medtronic.

With a volume of up to €4.65 billion, the issue is too big for institutional investors to ignore. “We’ve got to take a look at it,” said one fund manager.

There’s strong interest in Germany too, where investors tend to be more reticent. On average, only 5 percent of shares issued by domestic companies stay in Germany. But with Healthineers, that percentage will be significantly higher, said sources close to the co-ordinators.

Healthineers isn’t the only big German IPO in the pipeline. Deutsche Bank fund management subsidiary DWS published its prospectus Tuesday for an issue expected to raise up to €1.8 billion. And British private equity firm Apax wants to float its German discount fashion retailer Takko at the end of the second quarter, Börsen-Zeitung newspaper reported. Real estate firm Godewind Immobilien announced its flotation last Friday.

Consultancy EY expects 13 to 18 IPOs in Germany this year. Oliver Diehl, head of European equity capital markets at Berenberg Bank, expects the volume to reach up to €15 billion.

Peter Köhler is a Handelsblatt editor in Frankfurt, reporting on banks, private equity firms, venture capital and corporate funding. Robert Landgraf is Handelsblatt’s chief correspondent for the financial markets. To contact the authors: koehler@handelsblatt.com, landgraf@handelsblatt.com

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