Siloam’s Stake Lures Private Equity to Indonesia: Sources

By webadmin on 11:51 am Jul 09, 2012
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Janeman Latul & Stephen Aldred

Jakarta/Hong Kong. The chance to buy as much as 49 percent of Indonesia’s largest private healthcare operator, Siloam Hospitals, is attracting a slew of global private equity firms to the sale, as they bet on a rapid rise in healthcare spending in Southeast Asia’s biggest economy, sources said.

Property firm Lippo Karawaci, controlled by the billionaire Riady family, plans to sell a minimum 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 if the bids match its target valuation of over $1 billion, one of the sources said.

Indonesia has Asia’s third-largest population, but its healthcare spending only represented 2.8 percent of the country’s total GDP in 2011, among the world’s lowest healthcare spending-to-GDP ratios.

However, Indonesia’s rising middle class, which represents more than half of its population of 240 million, is expected to increase its spending on healthcare, which would drive growth in the sector over the coming years.

The stake in Siloam is attracting early interest from Bain Capital, Blackstone Group L.P. and KKR & Co L.P., banking sources told Reuters, funds which have only recently put Indonesia on their radar for deals.

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 comment.

(Disclaimer: The Jakarta Globe is affiliated with the Lippo Group.)