KKR to Acquire a Stake in Cotiviti From Veritas Capital

Industry:    11 months ago

Private equity firm KKR & Co has agreed to acquire a stake in Cotiviti from investment manager Veritas Capital, the healthcare technology firm said on Wednesday.

KKR and Veritas will have equal ownership stakes in Cotiviti following the deal’s closure, expected in the second quarter of 2024.

The financial details about the transaction, which will strengthen KKR’s portfolio of healthcare analytics investments, were not provided.

Reuters reported earlier on Wednesday that KKR was a leading contender to buy a 50% stake in Cotiviti and a deal would value the company between $10 billion and $11 billion

KKR has mandated a syndicate of banks to finance the deal, a source told Reuters, in a rare win for the traditional banking industry which has been ceding the buyout financing market share to private credit firms. JPMorgan is leading a group of banks helping to finance the Cotiviti deal with $5 billion worth of loans, another source said.

KKR declined to comment on details about how it was financing the deal.

Private firms can afford to make more risky loans, since they are not subject to the same degree of regulation as banks.

They have been a popular source of capital for buyout firms over the last few years as banks tightened their lending standards due to elevated interest rates.

The banking crisis in March last year and fears of exposure to potential bad loans tied to the commercial real estate industry made traditional lenders retrench further.

South Jordan, Utah-based Cotiviti, which was taken private by Veritas Capital in 2018, provides payment accuracy and analytics services to health insurers and other healthcare companies.

KKR’s healthcare portfolio includes investments in healthcare analytic firms such as Clarify Health Solutions, Headlands Research and Resolian Bioanalytics.

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