* Could sell as much as 49 pct, valuing firm over $1
* Indonesia has one of lowest healthcare spending-to-GDP
* Siloam stake attracts interest from Bain, Blackstone,
* Asia PE-backed healthcare acquisitions more than double in
By Janeman Latul and Stephen Aldred
JAKARTA/HONG KONG, July 9 Indonesia's PT Lippo
Karawaci may sell as much as 49 percent of its unit
Siloam Hospitals in a deal that would value the firm at more
than $1 billion, drawing a slew of private equity firms to the
sale as they bet on growth in healthcare spending in Southeast
Asia's biggest economy, sources said.
Indonesia has one of the world's lowest healthcare
spending-to-GDP ratios, but its rising middle class - which
represents more than half of its population of 240 million - is
expected to sharply increase its medical spending and drive
growth in the sector over the coming years.
The country, which has Asia's third-largest population, is
also starting to attract more private equity firms such as
Blackstone Group L.P. and KKR & Co L.P. as they
seek chances to invest in the region's fast-growing economies.
Lippo Karawaci, a property firm controlled by the
billionaire Riady family via its global conglomerate Lippo
Group, plans to sell a minimum of 20 percent of unit Siloam for
between $200 million and $300 million, and has hired Bank of
America Merrill Lynch to run the auction, sources with
direct knowledge of the matter told Reuters. First round bids
are due on July 16, two of the sources said.
Lippo could sell as much as 49 percent of Siloam,
Indonesia's largest private healthcare operator, if the bids
match its target valuation of over $1 billion, one of the
The stake in Siloam is attracting early interest from Bain
Capital, Blackstone and KKR, banking sources told Reuters. Other
private equity funds showing an interest in bidding include
Carlyle Group and TPG Capital with its affiliate
Northstar, the sources said.
Sources declined to be named as the discussions were
private. Bain and Carlyle declined to comment. Lippo Karawaci
spokesman Danang Kemayan Jati declined to comment.
BofA, Blackstone, KKR, TPG did not respond to requests for
The Riadys, who are looking to raise money to expand their
business, have previously looked at an IPO for Siloam, and it is
not certain they will proceed with a sale if valuations do not
meet their expectations.
The Siloam Hospitals group, which represents around 30
percent of Lippo Karawaci's asset value, operates nine hospitals
and is currently building four new ones.
"The Riadys expect Merrill to come back to them later this
month to get a clearer sense of demand and valuation from
investors," one of the sources said. "If the valuation is not as
expected they may delay the plan until next year."
The auction will test investor appetite for Indonesia's $23
billion healthcare sector, but the country's stability and its
growth potential, as well as expectations that its middle class
will drive growth in coming years, are drawing global private
equity funds into the country.
KKR and Blackstone are among the funds that are establishing
Singapore offices and building teams to boost their Southeast
Asia investments, including in Indonesia.
Bain Capital is also looking to hire executives as
competition heats up for a new wave of investing opportunities
in countries from Vietnam to Malaysia.
Carlyle and TPG have long-established deal teams for
Southeast Asia, and TPG has made a number of investments in
Indonesia, including a majority stake in PT Bank Tabungan
Pensiunan Nasional Tbk, valued around $1.3 billion.
Private equity funds see Indonesia's large family-run
conglomerates as potential targets to acquire non-core
businesses, and the Lippo Group has previously sold assets to
CVC, including PT Matahari Department Stores, and a 49 percent
stake in cable TV and Internet firm PT Link Net.
Private equity-backed acquisitions are down in all sectors
in Asia year to date except healthcare, where year-on-year deal
value doubled in the first half of 2012 to $669 million,
according to recent Thomson Reuters data.
KKR has already completed two healthcare-related deals so
far this year. In April the firm agreed to invest $65 million to
acquire 24 percent of China Cord Blood Corp, and last
month agreed to buy a majority stake in Australian healthcare
firm GenesisCare in a deal which valued the company at up to
A$600 million ($617 million).