(Reuters) – Private equity firm KKR & Co has agreed to acquire a stake in Cotiviti from investment manager Veritas Capital, the healthcare technology company said on Wednesday.
KKR and Veritas will have equal ownership in Cotiviti upon closing, which is expected in the second quarter of 2024.
Financial details about the deal, which strengthens KKR's healthcare analytics investment portfolio, were not disclosed.
Reuters reported earlier on Wednesday that KKR was a leading candidate to acquire a 50% stake in Cotiviti, and the deal would value the company between $10 billion and $11 billion.
KKR is requiring a syndicate of banks to finance the deal, a rare move for the traditional banking industry, which continues to cede market share in buyout financing to private credit companies, people familiar with the matter told Reuters. It was a victory. JPMorgan is leading a banking group that helped finance the Cotiviti deal worth $5 billion, another person familiar with the matter said.
KKR declined to comment on details of how the acquisition will be financed.
Private companies are less regulated than banks, so they can afford to make riskier loans.
It has been a popular source of funding for buyout companies over the past few years as rising interest rates have led banks to tighten lending standards.
Last March's banking crisis and concerns about potential bad debt exposure related to the commercial real estate industry forced traditional lenders to further reduce funding.
Cotiviti, based in South Jordan, Utah, was taken private by Veritas Capital in 2018 and provides payment accuracy and analytics services to health insurers and other healthcare companies.
KKR's healthcare portfolio includes investments in healthcare analytics companies such as Clarify Health Solutions, Headlands Research, and Resolian Bioanalytics.
(Reporting by Bhanvi Satija and Niket Nishant in Bengaluru and Syed Azhar in New York; Editing by Shilpi Majumdar)
