One of the country’s conglomerates is shelving the initial public offering (IPO) plan of its hospital unit, opting to tap capital infusion instead.
Metro Pacific Investment Corp. (MPIC) has signed an agreement with private equity fund KKR and Singapore’s sovereign wealth fund GIC for a new capital infusion into Metro Pacific Hospital Holdings Inc.
MPIC’s move comes just a week after the listing of the country’s biggest IPO in the past three years that put the spotlight anew on the local bourse.
“After much consideration, we believe we have found the best way forward for Metro Pacific Hospitals and MPIC with this new partnership with KKR. While we have decided for now to postpone the initial public offering for Metro Pacific Hospitals, I thank all the people involved in helping with this effort. I believe the added dimension KKR brings will help transform the delivery of healthcare services in the Philippines,” said Jose Ma. K. Lim, MPIC president.
Metro Pacific Hospital early this year filed an application for a P83.3-billion IPO with the company looking to offer to the public 417.09 million shares at an offer price of up to P182 per share.
In the agreement, the KKR-led consortium will subscribe to P5.2 billion ($100 million) worth of new common shares in Metro Pacific Hospital, equivalent to 6.25 percent of the company.
“Proceeds from the sale of shares in the company are expected to be used to support Metro Pacific Hospitals’ potential investments in additional hospitals and new healthcare businesses. The capital will also be used to grow the company’s existing subsidiaries, associates, and joint ventures,” Metro Pacific said.
The KKR-led consortium will also invest another a P30.1 billion ($580 million) in a mandatorily exchangeable bond that will be issued by MPIC this time.
The exchangeable bond grants the KKR-led consortium the right to exchange the bond for 239.93 million common shares in Metro Pacific Hospitals “on the sooner of 10 years or an initial public offering, which may be considered after further development of the business,” MPIC said.
“MPIC plans to use the proceeds of this issuance to reduce its bank borrowings,” the company said.
Metro Pacific Hospitals is the operator of the largest private hospitals and healthcare network in the Philippines in terms of authorized bed capacity and revenue, with interests in 14 hospitals and approximately 3,200 beds across the country.
“…This new partnership in the healthcare sector, which is an extension of our successful relationship with KKR with its investment in Voyager Innovations, a digital technology company of MPIC’s sister company PLDT. KKR’s record of assisting transformational businesses is well known, and our plans for the future of Metro Pacific Hospitals are ambitious,” said Manuel V. Pangilinan, MPIC and Metro Pacific Hospitals chairman.
“We welcome KKR as a new shareholder. Its cash infusion into Metro Pacific Hospitals will enable us to further grow our network, on our way to our new target of 5,000 beds and 30 hospitals before 2030. We also look forward to accessing KKR’s various healthcare companies in its global portfolio, to bring over new technologies and processes to improve healthcare services in our country,” added Augusto Palisoc Jr., Metro Pacific Hospitals president.
Ashish Shastry, co-head of Asia Pacific Private Equity and head of Southeast Asia at KKR, said the company’s venture into Metro Pacific Hospital “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.”
In addition to Metro Pacific Hospitals, KKR has invested in leading technology company Voyager Innovations in the Philippines.
The transactions are expected to complete by the end of 2019. KKR will make this investment from its Asian Fund III.
Bank of America Merrill Lynch and UBS served as financial advisors to MPIC and GIC.
Milbank LLP and Picazo Buyco Tan Fider & Santos meanwhile served acting as legal counsels to MPIC and GIC. Simpson Thacher & Bartlett LLP and Sycip Salazar Hernandez & Gatmaitan are acting as legal counsels to KKR.