Siemens had been meticulously planning the floatation of Healthineers, its healthcare subsidiary, which was touted as the largest IPO in Germany since 2000, for months. Yet no amount of preparation could make the company immune to market turmoil caused by US President Donald Trump’s decision to slap import tariffs, Britain's spat with Russia and inconclusive elections in Italy.
Siemens ploughed ahead nonetheless, adjusting its asking price to keep demand high. On Wednesday, Handelsblatt learned that the engineering giant would issue 150 million shares in its medical imaging and diagnostics business at €28 ($34.60) each, on the lower side of a guidance range which the company had hastily set to €26-31, significantly lower than initial expectations.
But then, to cap it all off, Friday’s market opening in Frankfurt was delayed by more than one hour after a technical failure hit the Frankfurt stock exchange. The reason for this highly infrequent mishap were problems affecting the bourse’s electronic trading platform, Xetra.
Siemens and Healthineers executives were left holding their breaths until 10:03 am, when the shares opened at €29.10, allowing them a collective sigh of relief. Healthineers CEO Bernhard Montag and stock exchange boss Theodor Weimer didn’t let go of the bell for minutes. During the course of the day, the share price gained as much as 6 percent.
This exciting moment was the culmination of a marathon IPO. Siemens and its healthcare unit, which makes X-ray, CT and MRI scanning machines, approached no fewer than 500 investors. The roadshow went from Frankfurt to New York, and Handelsblatt reported Wednesday that the IPO was already two times oversubscribed, despite the market uncertainty.
Even private shareholders, who normally do not play a role in Germany, were there. They were allocated about 10 percent, insiders told Handelsblatt. And this time, German investors were not elbowed out. While on average they get just about 5 percent of shares, this time they snapped up close to a quarter, with buyers from Britain and the US purchasing half of the shares.
Although Siemens CEO Joe Kaeser had hoped for a market value of up to €35 billion for his company’s subsidiary, the investors’ verdict was close to €28 billion. The Munich-based multinational floated 15 percent of Healthineers shares and can expect a windfall of €4.2 billion as a result.
However, the proceeds are not what matters most: Siemens' primary concern is whether Healthineers will be able to finance its own growth in the future, and thus play an active role in the global consolidation of the healthcare industry. To this end, the company's own shares will be used as an acquisition currency for the purchase of other companies. In addition, Siemens can now expect rising share prices and an increasing market value for its unit.
Though the Healthineers' premiere was a massive one, it is not the only IPO expected in Frankfurt this year. A week from now, another heavyweight is to go public: Deutsche Bank fund management subsidiary DWS opened subscription on Wednesday. Consultancy firm EY expects 13 to 18 IPOs in Germany this year, and Oliver Diehl, head of European equity capital markets at Berenberg Bank, expects the volume to reach up to €15 billion.
Until then Deutsche Börse's CEO Mr. Weimer can reassure DWS that his IT support is working overtime to ensure there won't be another technical meltdown.
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: [email protected], [email protected]