NEW BEGINNINGS Tender offer also sent to minority shareholders of one of the country’s top private hospitals. —PHOTO FROM website of the medical city
Luxembourg-based private equity and investment firm CVC Capital Partners will acquire a majority stake in The Medical City (TMC), thus ending a five-year dispute among the top stakeholders of one of the country’s premier private health-care institutions.
The Inquirer confirmed over the weekend that CVC Capital will take a 60-percent position in the hospital’s Philippine assets and operations through the purchase of a combination of new shares to be issued by Professional Services Inc.—the owner and operator of TMC—as well as existing shares from current owners.
A ranking hospital official revealed that CVC Capital’s buy-in will be worth P15 billion for TMC’s local businesses.
At the same time, the hospital sent out tender offer notices to existing stockholders last week, offering to buy some 2.4 million shares held by the minority at P2,932.51 apiece for a total consideration of a little over P7 billion.
”There will continue to be an expansion in existing hospital and clinics, which have suffered from lack of capital because of the demands of the Guam operation, plus filling out a more complete national network for health care with ventures and acquisitions,” the official said.
He added that CVC Capital, despite being a financial institution, “has experience in investing in hospitals, partnering with local management to create value for all stakeholders.”
”Within Asia, they have major stakes in Indonesia, Vietnam and Indian hospital chains,” the official pointed out.
Gonzales stays
After the buy-in, CVC Capital will hold eight of the hospital’s 15 board seats.
A ranking insider said Jose Xavier Gonzales would retain his position on the board as chair, while Dr. Eugenio Ramos will also retain his post as president and CEO of the business.
TMC’s local concerns which are included in CVC Capital’s buy-in include its operations in Clark, Pangasinan, Iloilo, the South Luzon Hospital and Medical Center in Laguna, as well as the Medical Arts Tower in Pasig City.
To be excluded from the deal is TMC’s growing healthcare businesses in Guam that will remain separately owned by existing shareholders, the company official said.
More importantly, sources said the Gonzales had come to an agreement with the camp of TMC’s former president Dr. Alfredo Bengzon, with the latter agreeing to the entry of CVC Capital.
The two are related as Bengzon is Gonzales’ uncle, and the latter is said to be the former’s “favorite nephew”. They have been embroiled in a bitter dispute since 2018 over which direction to take the medical institution, and have sued each other in court, before announcing at the height of the pandemic that they had resolved to settle their differences amicably.
Sources said the broad details of the new shareholder’s entry had been discussed with key hospital officials while a formal announcement to other shareholders will be made today, Monday.
Also set to be unveiled to the hospital’s stakeholders and management over the next few days will be the plans for the health institution, going forward, especially with the fresh equity that is expected to be used for expansion, service improvements as well as to retire debt owned to local creditors.
CVC Capital has an estimated $133 billion worth of assets under management, including two other recent investments in the Philippines: a stake in Fast Logistics of William Chiongbian, acquired in 2020, and an investment in the Landers Superstore chain made in 2021.