KKR, GIC to invest $680m in Philippines hospital operator

The company, in which GIC Private acquired a 14.4% stake five years ago for PHP3.7 billion, filed for a domestic listing last month, seeking to raise up to PHP83.3 billion through the sale of 457.9 million shares at PHP182 apiece. However, it was simultaneously negotiating with several private investors. Under the KKR-led deal, GIC will restructure its holding and re-invest in MPHH alongside the PE firm.

They will subscribe to approximately 41.4 million new shares, equivalent to a 6.25% stake, for a total consideration of PHP5.2 billion. KKR and GIC have also agreed to invest in a PHP30.1 billion mandatorily exchangeable bond issued by Metro Pacific Investments Corporation (MPIC), the Philippines conglomerate that controls MPHH. The bond can be exchanged for 239.9 million shares in MPHH after 10 years or on the company going public.

MPIC has been assessing its options regarding MPHH for several months. In May, the parent said it had dropped plans to list the business in favor of offloading a portion of its stake through the private markets, but subsequently decided to file for an IPO anyway. MPIC needed cash to pay down debt. It was going to take more than 90% of the proceeds of the planned IPO.

MPHH operates the largest private hospital and healthcare network in the Philippines. It has 14 tertiary hospitals – eight in the Manila metropolitan area – with a capacity of 3,200 beds. There are also seven primary care clinics located in shopping malls. It employs 8,373 doctors who see approximately 3.3 million outpatients and 193,800 inpatients every year. The company wants to grow its network to 5,000 beds and 30 hospitals by 2030.

MPIC’s healthcare group generated PHP12.9 billion in revenue in 2018, up from PHP10.7 billion the previous year. Net income rose from PHP689 million to PHP909 million over the same period. Power, toll roads and water utilities account for around three-quarters of MPIC’s PHP83 billion in sales to customers outside of the corporate group. MPIC is a subsidiary of Hong Kong-listed First Pacific.

First Pacific also controls Philippines telecom giant PLDT. Last year, KKR and Tencent Holdings led a $175 million investment in PLDT’s Voyager Innovations business, which operates platforms focused on payments, enterprise services, remittances, lending, and e-commerce rewards. This was KKR’s first private equity commitment in the Philippines.

“Today’s announcement is not only about bringing operational value and capital support to this business – it’s about supporting the impressive doctors, nurses and healthcare practitioners at Metro Pacific Hospitals who help millions of patients across the Philippines. Metro Pacific Hospitals exemplifies the type of high-caliber company KKR looks to work with, and we are thrilled to play a role in the development of the Philippines’ healthcare infrastructure,” Ashish Shastry, co-head of Asia Pacific private equity and head of Southeast Asia at KKR, said in a statement.

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• Topics
• Southeast Asia
• Expansion
• Healthcare
• Philippines
• KKR
• GIC Private