Indonesian companies have developed a tried and tested strategy to cope with the periodic plunges in the rupiah: retain dollars to protect their profits. (ID Photo/David Gita Roza)

For $45m, Private Equity Firm Creador Acquires Minority Stake in Hospital Operator Hermina


SEPTEMBER 07, 2017

Jakarta. Creador Kapital, a local affiliate of Kuala Lumpur-based private equity firm Creador, acquired a minority stake in Medikaloka Hermina, the operator of Hermina hospitals, for $45 million as part of the firm's efforts to reap benefits from Indonesia's growing healthcare sector.

The country's healthcare sector is ripe for the picking as the Indonesian government is committed to achieving universal health coverage by 2019.

"Among the private hospitals, Hermina is a standout, given its vast network, middle-class target group and its core expertise in mother and child care. Meanwhile, Indonesia's hospital sector is currently in growth mode and it will be the main component to push forward the government's agenda in providing affordable health care access," said Cyril Noerhadi, Creador's president director.

Hermina, which was founded by a group of doctors in 1970, currently operates 25 hospitals with approximately 2,600 beds in first and second tier cities across the archipelago.

Both companies did not disclose the amount of shares Creador acquired, but the private equity firm has a policy of holding only minority shares in their investments. Since its establishment in 2011, Creador invested in consumer retail companies, media and financial firms in Indonesia, Malaysia, Singapore and India.

Hermina also plans to go public next year to raise around $200 million by offering 15 percent of its equity, valuing the company at around $1.3 billion. In comparison, the largest listed hospital operator Mitra Keluarga Karyasehat has a market capitalization of $2.4 billion.

Hermina plans to use its IPO proceeds for business expansions and to refinance its debt. The hospital operator targets to operate 40 hospitals by 2020 and to employ local doctors.

The company reportedly plans to appoint Mandiri Sekuritas, Citigroup, Kresna Sekuritas and Credit Suisse as underwriters for the upcoming IPO.

Hermina president director Hasmoro said the company plans to add three more hospitals in Medan (North Sumatra), Purwekerto (Central Java) and Podomoro (East Java), and five more hospitals next year. He said the company usually invests Rp 80 billion to Rp 100 billion ($7.5 million) to build one hospital.

The company's plan to go public would make Hermina the fifth publicly-listed hospital operator on the Indonesia Stock Exchange (IDX) after Siloam Hospitals International, Mitra Keluarga Karya Sehat, Sarana Meditama Metropolitan and Sejahteraya Anugrahjaya.