CVC Capital Partners has acquired a 63.94% stake in The Medical City (TMC), the largest health network operating under a single brand based in the Philippines.
The transaction was completed through a mandatory tender offer process, which resulted in a PHP 12.7bn (USD 223m) capital infusion. The deal is expected to have significant implications for The Medical City, CVC Capital, and the healthcare industry in Asia.
The Tender Offer Process
The tender offer process involved CVC Capital purchasing shares from the stockholders of Professional Services Inc, TMC’s parent company.
The acquisition of the majority stake gives CVC Capital control over TMC’s operations, assets, and ventures. The tender offer notices were sent out in August 2023, and the transaction was completed in October 2023.
Significance for The Medical City
The capital infusion resulting from the deal is expected to address TMC’s lack of capital and support its expansion plans.
TMC President and CEO, Dr. Eugene Ramos, stated that the investment would enable TMC to improve its services and facilities and expand its Guam operation. The deal is also expected to result in service improvements and better healthcare outcomes for TMC’s patients.
CVC Capital’s Expansion in Asia
The deal marks CVC Capital’s expansion in Asia and its first investment in the Philippines. CVC Capital has experience in investing in hospitals, partnering with local management to create value for all stakeholders.
The investment in TMC is expected to provide CVC Capital with a foothold in the healthcare industry in the Philippines and the wider Asia region.
The deal is also expected to pave the way for further acquisitions and partnerships with Indian hospital chains, as well as expansion into Indonesia and Vietnam.
The deal is expected to have a positive impact on TMC’s equity and private equity markets, as well as its stakeholders and shareholders.
The deal comes at a time when the healthcare industry is facing challenges due to the pandemic, and the investment is expected to support TMC’s efforts to provide better healthcare outcomes for its patients.
The Players Involved
Key Figures at The Medical City
The Medical City (TMC) is one of the top private healthcare institutions in the Philippines. It is led by Dr. Alfredo Bengzon, who serves as the hospital’s President and CEO.
The hospital’s board is chaired by Jose Xavier Gonzales, who is also a former President of the hospital.
Other key hospital officials include Dr. Eugenio Ramos, the Hospital Chair, and William Chiongbian, a nephew of the hospital’s chairman and the owner of the Landers Superstore chain.
CVC Capital’s Role
CVC Capital Partners is a Luxembourg-based private equity and investment firm that has acquired a 63.94% stake in The Medical City (TMC) following a tender offer.
The deal is worth around $275 million, and CVC Capital will take control of the hospital’s management and board seats. CVC Capital’s investment is expected to help TMC expand its operations and improve its services.
Other Stakeholders’ Positions
Existing shareholders of TMC include local creditors and management. Fast Logistics, a logistics company, also owns a small stake in the hospital.
The acquisition by CVC Capital ends a five-year dispute among the top stakeholders of the hospital. The local management of TMC has expressed excitement about the investment from CVC Capital, as it is expected to bring renewed growth to the hospital.
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