KKR wants to retain MPHHI management

KKR, the global investment fund which acquired a stake in Metro Pacific Hospital Holdings Inc. (MPHHI), wants to retain the current management of the company and give the team more capital to bring the hospital business to greater heights.

“We took a look at this management as a team that we want to back for the long term. So that’s where we’re coming from. We don’t want to change the management team. In fact, we want to support them and give them more capital,

more investment and more firepower, effectively,” said Ashish Shastry, cohead of Asia Pacific Private Equity and head of Southeast Asia at KKR.

MPHHI, which has investments in 14 hospitals, is headed by Augusto Palisoc Jr. as president and CEO.

Last week, MPIC announced that it has signed definitive agreements under which KKR and an affiliate of GIC will invest in MPHHI in the form of investments in common shares and exchangeable bonds issued by MPIC.

With the deal, MPIC effectively shelved a planned initial public offering (IPO).

The deal with KKR raises P35.3 billion ($680 million) for MPIC.

In a telephone interview last week, Shastry said the major attraction for KKR was the level of experience and entrepreneurial ability of MPHHI’s management team to build a national hospital business in a relatively short space of time and the investments that they’ve made.

“By the way, our team has visited all 14 hospitals and we saw the changes they’ve made. We were very impressed by what they did. We’re sure that none of the other IPO investors that MPIC has spoken to have gone to all 14 hospitals, but we have,” Shastry said.

Shastry, however, said KKR is not closing its doors to an IPO in the future. “I think that we will support an IPO later down the track,” he said.

But for now, he said the focus is to invest in the company — the human capital side, the technology side, and expanding and improving the physical assets and the reach of the company.

“The Philippines is a fantastic demographic, it’s a young demographic, and a fast-growing population and the need for healthcare is much, much bigger,” Shastry said.

“We really want a chance to work with this management team and grow this business from the investment standpoint first,” he said.

Shastry said KKR wants to share its ideas with the management team on how to further grow the company.

“We’d like to share our ideas with them in detail about how we might be able to grow the company over the next 10 years,” he said.

The transaction is expected to close before the end of the year.