A consortium led by U.S. private equity firm KKR & Co. and Singapore's sovereign wealth fund, GIC Pte. Ltd., agreed to make a 35.3 billion-Philippine peso investment in Metro Pacific Investments Corp.'s hospital unit.
Under the definitive deal, the consortium will acquire 5.2 billion pesos worth of 41,366,178 new common shares of Metro Pacific Hospital Holdings Inc., the Philippines' largest hospital chain. The group will also invest in a 30.1 billion-peso bond issued by Metro Pacific Investments, exchangeable for 239,932,962 common shares in Metro Pacific Hospital over the next decade.
GIC, which owns 14.4% of Metro Pacific Hospitals, will restructure its investment in the company and will reinvest alongside KKR.
Metro Pacific Investments also shelved plans to list its hospital unit on the Philippine Stock Exchange, said Jose Ma. K. Lim, president and CEO of the parent company.
Metro Pacific Investments, which also holds interests in local electricity, water and transportation companies, owns 85.6% of Metro Pacific Hospital, according to S&P Global Market Intelligence data.
Augusto P. Palisoc Jr., president and CEO of Metro Pacific Hospital, said the deal will help achieve the company's new target of 5,000 beds and 30 hospitals ahead of 2030. The transaction will also give the company access to KKR's global healthcare portfolio.
Metro Pacific Hospital has interests in 14 hospitals and about 3,200 beds across the Philippines, eight of which are in Metro Manila. The company also owns stakes in eight primary care clinics and eight cancer care centers.
According to an August report from Reuters, KKR, Blackstone Group Inc. and CVC Capital Partners Ltd. were among the investors who submitted first-round indicative bids for a 40% stake in Metro Pacific Hospital. Metro Pacific Investments' stake in the hospital chain was being sold at a valuation of between $2 billion and $2.5 billion.
The deal is expected to be complete by the end of 2019.
Bank of America Merrill Lynch and UBS are acting as financial advisers to Metro Pacific Investments and GIC, while Milbank LLP and Picazo Buyco Tan Fider & Santos are serving as legal counsels. Simpson Thacher & Bartlett LLP and Sycip Salazar Hernandez & Gatmaitan are legal counsels to KKR.
As of Oct. 14, US$1 was equivalent to 51.59 Philippine pesos.