SAO PAULO, May 27 (Reuters) - GIC Private Ltd, Singapore’s sovereign wealth fund, has agreed to pay about 3.3 billion reais ($1 billion) for a 16 percent stake in Rede D‘Or Sao Luiz SA, Brazil’s largest hospital chain, a source with direct knowledge of the transaction said.
GIC will acquire the stake in equal shares from Brazilian businessman Jorge Moll and his family, who founded Rede D‘Or, and Grupo BTG Pactual SA, said the source, who asked for anonymity because the information is private. An announcement could take place as early as Wednesday, the source added.
The deal comes weeks after Moll and BTG Pactual sold an 8 percent stake in Rede D‘Or to Carlyle Group LP for 1.75 billion reais.
GIC is buying the 16 percent stake at a price that is about 11 times estimated annual operational profits of Rede D‘Or for this year. That is below the average multiple of 15 times seen in healthcare deals in the Americas in the first five months of the year, according to Thomson Reuters data.
BTG Pactual declined to comment, and a Carlyle representative was not immediately available to comment. Efforts to reach the media offices representing the Moll family and GIC were unsuccessful.
The purchase of the Rede D‘Or stake should help give GIC direct exposure to a sector that represents 10 percent of Brazil’s gross domestic product but is grappling with an ageing infrastructure, a dearth of qualified staff and rising costs.
Rede D‘Or, which operates 27 hospitals in four Brazilian states, last year had revenue of 5.5 billion reais and earnings before interest, tax, depreciation and amortization of about 930 million reais.
Foreign interest in Brazilian hospitals skyrocketed following President Dilma Rousseff’s decision to end the ban on foreign ownership in the sector early in January. Industry leaders expect private equity involvement in Brazil’s hospital industry to help restore profitability in the sector. (Additional reporting by Aluísio Alves in São Paulo; Editing by Leslie Adler)