FRANKFURT, March 15 — Siemens is set to price the initial public offering (IPO) of its medical equipment unit Healthineers in the lower half of its guidance range, one of the bookrunners indicated after the deadline for offers.

“Books are closed. Orders below €28 per share risk missing the deal,” the bookrunner said in a message to investors.

Siemens had offered the shares in a range of €26 to €31. A price of €28 would value Healthineers at about €28 billion (approx. RM137 billion), making it one of Germany’s biggest listings in recent years.

But that would be well down on initial expectations of €35-40 billion. Investors have cited uncertain prospects for Healthineers’ diagnostics business — machines for high-throughput testing of blood and urine — and slightly more volatile markets, which have pushed valuations off record highs.

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The stock is set to start trading on the Frankfurt Stock Exchange tomorrow.

The listing is aimed at enabling Healthineers to raise its own funds for takeovers and investments as well as crystallising its standalone value — removing some of the “conglomerate discount” that some investors say weighs on Siemens’ valuation.

Siemens, which is selling a 15 per cent stake in the world’s largest maker of medical imaging equipment, is set to reap €4.2 billion in proceeds.

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Healthineers’ management has said it will catch up quickly with established diagnostics competitors, but Sebastien Buch from fund manager Union Investment — a top 10 Siemens shareholder, which is buying into the IPO — voiced some doubts.

“On paper, (Healthineers’ diagnostics platform) Atellica shows great performance metrics. But it is a new platform with hardly any track record,” Buch told Reuters.

He also said rivals such as Roche and Abbott had functions to include molecular diagnostics that Healthineers still lacked.

“A discount is warranted as investors are sceptical about how successful the roll out (of Atellica) will be. The preceding five Siemens diagnostics platforms continually lost market share over the last couple of years,” he said.

The Healthineers IPO, which investors have hailed as a pure-play medical technology (medtech) investment, is one of Germany’s biggest listings since the IPOs of Deutsche Post and Infineon in 2000 and Innogy’s flotation in 2016.

The company could be on track to join Germany’s midcap index in June via a fast-track entry mechanism, which allows for any company ranking among the top 45 companies — in terms of free-float market capitalisation and trading volumes — to join the index ahead of the normal assessment date.

“With its expected free float market cap of about €4.2 billion, Healthineers currently ranks 18th and clearly exceeds the 1.9 billion needed for fast entry inclusion,” said Silke Schluensen, index specialist at brokerage Oddo Seydler, adding the shares also needed trading volumes of about 230,000 units a day, which appeared doable.

“If Healthineers is classified as technology it would join the TecDax easily as it would rank fourth in market cap and would need trading volumes of only 120,000 shares a day,” she said.

From September, Deutsche Boerse is planning to allow tech companies to also join other indices. — Reuters