UPDATE 1-KKR and GIC buy 42.5% stake in Philippines’ top hospital chain

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MANILA (Reuters) – Philippines’ Metro Pacific Investments Corp (MPI.PS) said on Tuesday it is selling a 42.5% stake in the country’s largest hospital chain to a consortium led by private equity firm KKR & Co (KKR.N) for 35.3 billion pesos ($684.5 million).

MetroPacific also said it was postponing a previously flagged $1.6 billion initial public offering for Metro Pacific Hospital Holdings Inc, which operates 14 hospitals, many of which are among the largest and most modern in the Philippines.

The sale, which values the whole unit at 83 billion pesos ($1.6 billion), had drawn interest from buyout firms due to strong healthcare spending in Southeast Asia.

The cash infusion will enable the company to hit its target of growing its network to 30 hospitals with 5,000 beds before 2030, Augusto Palisoc, president of the healthcare group, said in a statement.

The consortium is made up of KKR and Singapore’s sovereign wealth fund GIC, which will restructure its current investment in the hospitals business and re-invest with the buyout firm.

Under the deal, KKR will acquire 5.2 billion pesos ($100.8 million) worth of shares in the hospital business. KKR will also invest 30.1 billion pesos ($583.7 million) for convertible bonds that will be swapped for Metro Pacific’s hospital shares in the next decade. Metro Pacific expects to close the deal by the end of the year.

Metro Pacific had earlier pursued a dual track process to reduce its holding in the hospital chain and raise cash for debt payments. It announced plans to sell a minority stake in August, followed by a September filing to conduct an up to $1.6 billion initial public offering.

Reuters reported last month that KKR was among the suitors who advanced to the second round of the bidding process.

KKR has already had dealings with the extended group of companies that are units of First Pacific Co Ltd (0142.HK), which is owned by Indonesian tycoon Anthoni Salim. In 2018, it and Chinese tech giant Tencent Holdings Ltd acquired a minority stake in the financial technology arm of Philippines’ PLDT Inc.

Reporting by Neil Jerome Morales; Editing by Muralikumar Anantharaman and Jane Wardell

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