June 1, 2020 / 1:56 PM / a month ago

Brazil's XP acquires controlling stake in eye hospital

SAO PAULO, June 1 (Reuters) - A private equity fund managed by Brazilian digital broker XP Inc acquired a controlling stake in eye hospital CBV for 200 million reais ($37.48 million), XP’s executives said on Monday.

XP plans to use CBV as a platform for consolidation in a sector spread across 5,000 clinics all over the country and annual revenues around 8 billion reais, XP’s partner Chu Kong said in an interview with Reuters.

The deal is the latest sign of consolidation in the once fragmented Brazilian healthcare system, a trend previously seen with laboratories, hospitals and oncology practices.

“Eye clinics and hospitals make an attractive business because eye care is still underpenetrated in Brazil and also because it is a life-long treatment, permeating all age brackets,” said Kong, who did not specify what portion of the hospital the XP fund will own.

Brasilia-based CBV is the first acquisition by XP’s recently launched private equity fund, which raised 1.3 billion reais from more than 5,000 investors in February to invest in middle-sized companies.

Founded by physician Marcos Avila in 2004, the hospital posted revenues of nearly 80 million reais last year, making 100,000 appointments and 7,000 surgeries.

“I joined XP because I saw the opportunity to consolidate the sector, but I lacked capital to fund the project,” Avila said, adding that all money invested by XP will fund acquisitions. CBV’s goal is to reach 1 million appointments in five years after acquisitions and organic growth.

Avila will remain in the business both as a shareholder and medical director. But Rafael Mendes, a former partner at private equity firms Victoria Capital Partners and Principia Capital Partners, was tapped as the chief executive officer. Previously, Mendes lead acquisitions by oncology group Oncoclinicas.

$1 = 5.3360 reais Reporting by Carolina Mandl; Editing by Andrea Ricci

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