The initial public offering of private equity-backed HCA, the biggest U.S. for-profit hospital chain, is well oversubscribed and could price above the planned range on Wednesday, sources familiar with the situation said.

Although analysts warn of long-term risks related to HCA's big debt and uncertainties surrounding U.S. healthcare reform, investor interest in the shares dwarfs the deal's size, the sources said.

The IPO is likely to price at $30 to $31 per share, compared with the proposed range of $27 to $30, they said.

At either price, the offering, expected to value the company at $15.5 billion, is on track to become the largest U.S. private equity-backed IPO ever and set the tone for a slew of similar exits from investments made at the height of the credit bubble in 2005 to 2007.

Sources familiar with investor interest told IFR, a Thomson Reuters service, that some institutions may want to buy more than $500 million of HCA stock.

Because the information is not public, the sources declined to be named.

Investors are looking past healthcare, looking past some of the risks that come with this company, and it will maybe ride the momentum generated by recent deals, said Bill Buhr, IPO strategist at Morningstar.

The true demand for HCA's stock is difficult to estimate, but one source told Reuters the IPO is roughly seven times oversubscribed. Investors frequently inflate their orders, and could pull out if they deem the share price too high.

If HCA priced its IPO at $31, it would see some investors shrink their orders but would not lose any broad class of investors, the source said.

Discussions with large mutual funds and some specialist hedge funds will ultimately determine the IPO price, the source said. Roughly 5 percent of the orders are from a half-dozen sovereign wealth funds, the source said.

HCA originally filed with U.S. financial regulators in May to raise up to $4.6 billion, but last month set terms that cut the size of the deal by 19 percent.

Far surpassing its peers by market cap, a newly public HCA could generate more investor interest in the sector, and also turn the company into a major acquirer, possibly involved in Community Health Systems' $3.3 billion takeover battle for Tenet Healthcare Corp .

RISKS AND IPO MOMENTUM

Analysts warn that in clamoring for HCA's shares, investors are overlooking big longer-term risks, including its high level of debt and the uncertain impact of healthcare reform.

The new U.S. healthcare law is expected to increase volumes of insured patients seeking medical help, but it also phases in Medicare payment cuts to hospitals and will make it harder to negotiate reimbursement rates.

HCA also has more than $26 billion of debt, and the debt would continue to saddle the company even after it uses the IPO proceeds to pay off borrowings. Although HCA is profitable and has healthy cash flows, its debt exceeds the value of its assets on the books by more than $12 billion.

But HCA's IPO is benefiting from the strong momentum created by a series of successful IPOs this year.

The market is clearly enamored for these types of deals and the window could not be more open than now, Buhr said.

Over the past few weeks, consumer measurement company Nielsen Holdings raised $1.6 billion, Florida-based BankUnited raised $783 million, and pipeline company Kinder Morgan raised $2.9 billion.

Toys R Us has filed with U.S. regulators to raise up to $800 million, and Freescale Semiconductor has filed to raise up to $1.15 billion. Although neither company has set terms or picked a debut date, a blockbuster IPO by HCA could help them -- and other buyout-backed firms mulling IPOs.

HCA was taken private in November 2006 in a $21 billion deal, excluding debt, that involved Bain, KKR, Bank of America Corp , Citigroup Inc and HCA's founder, healthcare mogul Dr. Thomas F. Frist Jr.

The shares are expected to begin trading on the New York Stock Exchange on Thursday under the symbol HCA. Underwriters on the IPO are led by Bank of America Merrill Lynch, Citi and JPMorgan Chase .

(Reporting by Clare Baldwin, Stephen Lacey, Alina Selyukh and Susan Kelly in Chicago; Editing by Dan Wilchins, Bernard Orr, Dave Zimmerman and John Wallace)

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