Global private equity group CVC Capital Partners will buy a 15% interest in PT Siloam International Hospitals Tbk (Siloam) for IDR2.2 trillion through share purchases from PT Lippo Karawaci Tbk (LPKR) and Ciptadana.
There will also be a participation in a proposed rights issue by Siloam.
Siloam has already submitted a letter to Indonesia’s Financial Service Authority (OJK).
The deal is expected to be completed by December 2016.
The letter submitted to OJK commences 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 expand Siloam's network of hospitals and subscribe to new shares in Siloam’s rights issue.
LPKR plans to continue being a long term majority shareholders of Siloam as it continues to bolster and grow its position in the Indonesian healthcare market.
The proceeds raised from the rights issue will be 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, in 2010 and PT Link Net in 2011.
LPKR president director Ketut Budi Wijaya said: "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 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”