PT Lippo Karawaci Tbk ("LPKR") today announced a Rp 2.2 trillion equity deal in which global private equity group CVC Capital Partners ("CVC") will acquire a 15% interest in PT Siloam International Hospitals Tbk ("Siloam") through share purchases from LPKR and Ciptadana and its participation in a proposed rights issue by Siloam.
Siloam has already submitted a letter to Indonesia’s Financial Service Authority (“OJK”) and the process for the entire transaction is expected to be completed by December 2016. The letter submitted to OJK kicks off the start of a formal process to obtain both shareholders and regulatory approval for the rights issue.
LPKR will use the majority of the shares placement's proceeds to further expand Siloam's network of hospitals and subscribe to new shares in Siloam’s rights issue. LPKR intends to continue being a long term majority shareholders of Siloam as it continues to strengthen and grow its already leading position in the Indonesian healthcare market.
The proceeds from the rights issue will be primarily used by Siloam to finance its hospital projects expansion and general working capital.
The Siloam investment represents the third partnership between the Lippo Group and CVC, including successful joint investments in PT Matahari Department Store, Tbk (“MDS”) in 2010 and PT Link Net, Tbk (“LINK”) in 2011. The total enterprise value of MDS and LINK had quadrupled at the time of its international public offerings in March 2013 and Nov 2014, respectively.
Ketut Budi Wijaya, LPKR President Director stated, "We are committed to expanding Siloam's robust national hospital network. CVC's partnership will make this a reality sooner and more certain. At the same time this will increase the Siloam's free float thus broadening Siloam’s shareholder base, which will importantly further improve liquidity of Siloam’s shares. I am pleased that this confirms the strong interest in Siloam as the company further expands its National Hospital Network”
Siloam’s Finance Director, Budi Legowo, stated, “We are running a busy agenda to solidify the foundations for growth and enhanced productivity, efficiency and earnings. Wonderful opportunities to invest in the growing demand for quality healthcare services in Indonesia which is as yet unfulfilled. With this exercise, Siloam will be well positioned to scale-up and benefit from the future growth”
Thong Sennelius, Director of Indonesia's leading investment house commented, “Siloam strategy and business model is highly attractive. We expect the rights issue will be successfully taken up by shareholders.”
Sigit Prasetya, CVC’s Managing Partner and Co-head of Asia commented, “Lippo Group has admirably built a very successful and scaleable business with a very capable management team. 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. We are very honoured to have the opportunity to partner with the Group and contribute to the exciting growth story".
Puan Maharani, Coordinating Minister for Human Development and Culture, stated, “We welcome this significant investment, which will realize social equality in the hospital service accessible by the public. The government encourages and appreciates the participation of the private sector to work together in expanding the outreach of universal health insurance program, Health Sector's BPJS, for all citizens of Indonesia. Siloam Hospitals is one of several groups of private hospitals who are willing to participate in BPJS to contribute to improved access and quality of health services in Indonesia.”
Thomas Lembong, Head of Indonesia Investment Coordinating Board/BKPM, stated, “We welcome another CVC investment in Indonesia. This investment will provide considerable added value to Indonesia’s economy, particularly to Siloam and Lippo Group. There will be a transfer of knowledge from their long international investment experience and sharing of best practices in the development of quality healthcare services in Indonesia."
CVC is a leading global private equity and investment advisory firm with a network of 24 offices throughout Europe, Asia and the U.S. To date, CVC has secured commitments of USD 85 billion from some of the world’s most discerning investors across its European and Asian private equity, credit and growth funds. CVC Funds have completed over 300 private equity investments in a wide range of industries and countries across the globe including over 50 companies in Asia Pacific. In Indonesia, CVC Funds have completed 4 investments in leading businesses since 2010 in Matahari Department Stores, Link Net, MAP Active and Softex. CVC Funds have a successful track record of investing in the healthcare services sector globally, such as Affinity Health, Australia’s largest private hospital group, Capio Sanidad, a leading private hospital operator in Spain, General Healthcare Group in the U.K., and IDC, an operator of private hospitals in Spain.
LPKR is the largest listed property company in Indonesia by total assets and revenues, anchored by a large land bank and solid recurring income base. LPKR's businesses comprise Residential/Township, Retail Malls, Hospitals, Hotels and Asset Management. LPKR is listed on the Indonesian Stock Exchange with a market capitalization of Rp26.5 trillion or USD 2 billion as of August 15, 2016
Siloam is Indonesia’s largest private national healthcare group with over Rp 5 trillion in annual revenues, 23 operating hospitals, 16 clinics in 17 cities throughout the country, and 5,100 beds capacities supported by more than 1,900 specialists and general practitioners as well as over 7,000 nurses and support staff. It is also the first JCI accredited hospital in Indonesia and a repeat winner of “Frost & Sullivan, Indonesia’s Healthcare Service Provider of the Year”. Siloam is listed on the Indonesian Stock Exchange under the ticker name “SILO” with a market capitalization of Rp11.7 trillion or USD886 million as of 15 August 2016.