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Blackstone, KKR vie for Lippo’s Indonesia healthcare unit stake

PT Lippo Karawaci

Blackstone, Bain Capital, KKR & Co and Dubai's Abraaj Capital have been shortlisted for the second phase of an auction of a fifth of private Indonesian healthcare operator Siloam, sources said, in a deal that could fetch as much as $300 million.

August 27, 2012 12:20 by



Blackstone, Bain Capital, KKR & Co and Dubai’s Abraaj Capital have been shortlisted for the second phase of an auction of a fifth of private Indonesian healthcare operator Siloam, sources said, in a deal that could fetch as much as $300 million.

But the bidders may back out as they view the asking price for the stake set by the seller, property firm PT Lippo Karawaci, as steep, the sources, who had direct knowledge of the deal, said.

Lippo is seeking a valuation of more than 20 times Siloam’s forward core earnings for the stake, implying a valuation of more than $1 billion for the country’s biggest private hospital firm, they said, declining to be named as the discussions were private.

One of the sources told Reuters that first-round bids were below expectations, but the sale process will continue to give the buyers an opportunity to bid higher. It wasn’t clear how much the bidders had offered for the stake in the first round.

“Lippo may be back in the market next year if the valuation disparity is too big,” said one of the sources.

Lippo plans to sell a minimum 20 percent of unit Siloam Hospitals for between $200 million and $300 million, but could increase the stake to 49 percent if the price is right. It hired Bank of America Merrill Lynch to run the auction, sources have told Reuters earlier.

Lippo Karawaci spokesman Danang Kemayan Jati declined to comment. BofA, Abraaj and KKR declined to comment while Blackstone and Bain were not immediately available to comment.

Siloam, which represents around 30 percent of Lippo Karawaci’s asset value, operates nine hospitals and is currently building four new ones.

Indonesia has Asia’s third-largest population, but its healthcare spending only represented 2.8 percent of the country’s total GDP in 2011, among the world’s lowest healthcare spending-to-GDP ratios.

However, Indonesia’s rising middle class, which represents more than half of its population of 240 million, is expected to increase its spending on healthcare, which would drive growth in the sector over the coming years.



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