CVC agrees $166m deal to invest in Indonesian hospital operator

The private equity firm will acquire a 15% interest in the Jakarta-listed hospital operator, buying shares from a Lippo vehicle and other shareholders, and also participate in a proposed rights issue. Siloam's stock closed at IDR10,400 on August 29, valuing the company at approximately IDR12 trillion.

Siloam is Indonesia's largest private healthcare group with a capacity of 5,100 beds across 23 hospitals and 16 clinics in 17 cities. It employs more than 1,900 specialists and general practitioners as well as over 7,000 nurses and support staff. The company posted IDR4.14 trillion in revenue for the 2015 financial year, up 24% year-on-year, while EBITDA grew 23% to IDR574 billion. Net profit dropped slightly to IDR62 billion.

As of March, Lippo-related entities owned 60.5% of Siloam with the rest publicly traded. The company completed its IPO in September 2013 in difficult market conditions, having cut the size of the offering by 40% to IDR1.48 trillion. Barely 12 months earlier, Siloam was a target for private equity as Lippo sought to sell off a 20-49% interest. The deal didn't go through, supposedly because the desired valuation of up to 25x EBITDA was not met.

The proceeds of the share placement will be used to expand the company's network of hospitals. When announcing its first quarter results, Siloam set out ambitious expansion plans, with a target capacity of up to 10,000 beds across 50 hospitals in 25 cities for 2017. It claimed to have 43 sites under various stages of development.

"Both Lippo Group and Siloam are committed to develop a world-class healthcare network in Indonesia, serving all segments of the population. We believe Siloam is very well positioned to leverage the underserved healthcare market in Indonesia, as it continues to build a hospital network unrivalled in scope and scale across Indonesia," Sigit Prasetya, managing partner and co-head of Asia at CVC, said in a statement.

CVC first worked with Lippo in 2010 when it acquired a majority stake in Matahari Department Store at an enterprise valuation of $892 million and ran the business as an 80-20 joint venture with its local partner. Matahari was already listed, but with just a 1.8% public float, and the private equity firm completed its first partial exit in 2013, raising $1.3 billion alongside Lippo. There have been five more share sales over the past two years.

CVC and Lippo also teamed up on broadband and cable TV provider Link Net in 2011, with the private equity firm investing $275 million for a 49% interest. The company went public in June 2014 - described as a technical IPO - and a few months later a CVC, Lippo and other investors unloaded a 30% stake for around IDR8.15 trillion.

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Save this article  
• Send to  

• Topics
• Southeast Asia
• Healthcare
• PIPEs
• Indonesia
• CVC Capital Partners