CVC Capital Partners has paid 2.2 trillion rupiah ($166 million; €148 million) to acquire a 15 percent stake in PT Siloam International Hospitals, Indonesia’s largest private hospital group.
CVC is acquiring its stake in the hospitals operator from PT Lippo Karawaci, an Indonesian property developer; Ciptadana, an Indonesian brokerage and asset manager; and through a proposed share offer by Siloam.
“We believe Siloam is very well positioned to leverage the under-served healthcare market in Indonesia, as it continues to build a hospital network unrivalled in scope and scale across Indonesia,” said Sigit Prasetya, CVC managing partner and co-head of Asia.
Lippo said it will use the majority of the proceeds to expand Siloam’s network of 23 hospitals and 16 clinics in cities across Indonesia. Siloam is planning to open 40 new hospitals outside of metropolitan Jakarta by the end of 2017, according to a report from Ernst & Young.
Following the deal, Lippo, which before the CVC investment owned around 60 percent of Siloam, will remain the majority shareholder in the hospital group. Siloam listed 14 percent of its shares on the Indonesian stock exchange in 2013 and has a current market capitalisation of around $886 million.
The deal, expected to be complete this December, is the third struck between Lippo and CVC. In 2010 CVC paid the $2.2 billion family-run group $790 million for Indonesian department store Matahari, and in 2011 the private equity firm paid Lippo $275 million for a stake in Indonesian internet service provider and pay TV operator Link Net.
CVC has invested in a number of private hospital groups around the world including Affinity Health, Australia’s largest private hospital group, Capio Sanidad, a private hospital operator in Spain, and General Healthcare Group in the UK. CVC is currently investing in Asia from CVC Capital Partners Asia Pacific IV, a $3.5 billion vehicle closed in May 2014. A spokeswoman for CVC confirmed the Siloam investment was made from this fund.
Indonesia, with its population of more than 250 million, is a rapidly growing market for the healthcare industry. According to Ernst & Young, the country’s rising middle class along with basic healthcare coverage introduced by the government in 2014 will fuel the demand for private healthcare in Indonesia.
CVC manages over $85 billion of assets across European and Asian private equity, credit, and growth funds. Limited partners in CVC’s funds include the New York State Common Retirement Fund, Japan Bank for International Cooperation and the Canada Pension Plan Investment Board, according to Private Equity International Research & Analytics.
Additional reporting by Carmela Mendoza