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T Siloam International Hospitals, a subsidiary of PT Lippo Karawaci, plans to raise a maximum of Rp 2.3 trillion (US$223.1 million) through an initial public offering (IPO) to support its expansion and pay its debts.

Siloam, which started its business in 1996, plans to sell 162.7 million new shares, or around 14 percent of its enlarged capital, within a share price range of between Rp 11,200 and Rp 14,200 apiece next month.

About 52.5 percent of the funds will be allocated for expansion, including the expansion of its current hospitals, purchases of new medical equipment and construction of new hospitals.

The company will use 27.5 percent of the funds to pay debts to the parent company and the other 20 percent for acquisitions, said John Herry Teja, director of PT Ciptadana Securities, which acts as one of the lead underwriters.

Siloam also appointed PT Credit Suisse Securities Indonesia as the domestic lead underwriter, as well as Singapore-based Credit Suisse Ltd. and Goldman Sachs Pte. as joint global coordinators, international selling agents and book runners, to attract foreign investors as well.

In order to lure foreign investors, Siloam also plans a road show to Singapore, Hong Kong and London, said Credit Suisse Indonesia director Harry Zen on Thursday.

The book building period is running until Aug. 28, during which the company generates, captures and records investors' demands for shares during the IPO, which is scheduled for Sept. 4-6.

Siloam plans for the listing on Sept. 12.

Until April, Siloam operated 14 hospitals with over 3,436 beds throughout Indonesia.

The company has targeted to increase the number of hospitals to 40 and beds to 10,000 in the next five years, said Siloam president director Gershu Paul during the public expose.

He said the company would need around $25 million to build one hospital.

Siloam would open two new hospitals this year, in Medan, South Sumatra, and in Kupang, East Nusa Tenggara, which were funded by the parent company, said Paul.

The funds from the offering would be used to build more hospitals in Bandung and Bogor, West Java; in Semarang, Central Java; in Padang, West Sumatra; and in Yogyakarta, Paul said.

Siloam has 19 projects in the pipeline, including hospitals that are under construction, according to the company's finance director, Romeo Lledo.

It plans to open six new hospitals next year and eight more the following year, he said.

'Some [hospitals] are under construction and others are still in the design process,' said Romeo.

The total expenditure for the ongoing projects was about Rp 1.8 trillion.

'When we get to 24 hospitals, our free cash flow generated by 24 hospitals, [possibly] around 2015-16, will be enough for us to fund four to five hospitals,' said Paul.

He added that the firm had secured plots of land for the development of all future hospitals, thanks to the parent company. (nai)