MPIC gets P35.3B for 42% of hospital unit

Infrastructure holding firm Metro Pacific Investments Corp. (MPIC) has raised P35.3 billion by selling around a 42-percent stake in leading local hospital network operator Metro Pacific Hospital Holdings Inc. (MPHHI) to a consortium led by American private equity firm KKR.

With this deal in the bag with KKR—which will invest along with GIC, Singapore’s sovereign wealth fund—MPIC decided to postpone the P83-billion initial public offering (IPO) filed at the Securities and Exchange Commission in September, MPIC president and chief executive officer Jose Ma. Lim said in a disclosure to the Philippine Stock Exchange on Tuesday.

KKR and GIC signed definitive agreements to invest in MPHHI in a mix of outright equity and MPIC bonds that were required to be swapped into shares in MPHHI as soon as country’s largest hospital network proceeded with its IPO or within 10 years, whichever came first.

The IPO is still under consideration after further development of the business, the disclosure said.

GIC, already an existing investor in this hospital business, will restructure its current investment and will re-invest alongside KKR as part of the deal.

Based on the figures disclosed, the shares to be acquired by the KKR-led consortium will give it around 42 percent of MPHHI.

Under the terms of the agreement, the KKR-led consortium will subscribe to P5.2 billion ($100 million) worth of about 41.37 million new common shares in MPHHI equivalent to about 6.25 percent of total par value. Proceeds will fund MPHHI’s potential investments in additional hospitals and new health care businesses as well as grow existing subsidiaries, associates, and joint ventures.

As part of MPIC’s wider financing arrangements, the KKR-led consortium will also invest in a P30.1-billion ($580 million) mandatorily exchangeable bond issued by MPIC . The bonds are required to be exchanged for about 239.93 million common shares or an additional of about 36 percent stake in MPHHI within 10 years or as soon as the hospital business rekindles its IPO plan.

MPIC plans to use the proceeds of this issuance to reduce its bank borrowings.

“I am delighted that we are able to announce this new partnership in the health care 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,” MPIC and MPHHI chair Manuel V. Pangilinan said in a statement.