By Carolina Mandl and Tatiana Bautzer SAO PAULO, Feb 16 (Reuters) - Brazil's public health system has been pushed to the breaking point by one of the world's deadliest coronavirus outbreaks, but its private healthcare sector is experiencing an unlikely dealmaking boom. The push to consolidate, which comes amid rising demand even beyond the pandemic thanks to an aging population, has spawned the country's biggest takeover deal so far this year, its top IPO in recent years and has lured investors ranging from U.S. private equity firm Carlyle Group Inc CG.O to venture capital funds and one of Brazil's most prominent real estate developers, Cyrela CYRE3.SA founder Elie Horn. "The Brazilian population is aging at a fast pace. It means there will be a higher demand for healthcare," said Morgan Stanley Executive Director Cezar de Faria. "Given Brazil's budget constraints, it is very unlikely the government will be able to provide all services required.” By 2060, people over age 65 will account for 25.5% of the country's population, up from roughly 10% now. Investors and bankers also cite factors including demand for alternatives to the country's overwhelmed public health system and ample room to boost efficiency at privately owned hospitals. Hospital operator Rede D'Or pulled off Brazil's largest IPO in seven years last December urn:newsml:reuters.com:*:nL1N2IO21D and health insurance providers Hapvida SA HAPV3.SA and Notre Dame Intermedica GNDI3.SA SA have proposed the largest merger so far this year in the country, worth around $9 billion. Brazilian private equity firm IG4 was so tempted by the turnaround potential for the country's underperforming private hospitals that it created a company aimed at buying and reviving them. After a series of deals, IG4's OPY Health is now seeking a roughly $100 million private placement to buy six more hospitals, one source familiar with the fund told Reuters. Along with the two large deals, OPY's buying spree shows how a dealmaking boom is transforming the country's fragmented private healthcare system. The recent spate of transactions has bankers actively hunting for the next opportunities in the $197 billion private health sector. While the pandemic has not played a direct role in the deal bonanza, it may indirectly bolster growth in the private investments as public clinics in cities like Manaus get pushed to their limits by the coronavirus crisis. OPY Health owns one of the largest hospitals serving Brazil's public health system in Manaus, and has had a lower COVID-19 mortality rate than state-run ones during the city's recent crisis with oxygen shortages. As of Monday, Brazil had 239,245 coronavirus-related deaths, trailing only the United States, and the country had more than 9.8 million infections. (Graphic: https://tmsnrt.rs/34pvUyi) (Interactive graphic tracking global spread of the coronavirus: open https://tmsnrt.rs/2FThSv7 in an external browser.) At the same time, Brazil government regulations cap prices only for drugs and health insurance sold directly to individuals, but not to employer group plans, contributing to lofty margins. VITAL SIGNS Rede D'Or, whose December IPO may have been the first sign of the hunger for such assets urn:newsml:reuters.com:*:nL1N2IO21D, now trades at 68 times its earnings before interest, taxes, depreciation and amortization (EBITDA), much higher than larger U.S. peer HCA Healthcare Inc HCA.N , which trades at 9 times EBITDA. Hapvida and Intermedica are also trading at nearly 30 times EBITDA. Still, the pricey valuations have yet to spook most investors. Carlyle and Singapore's GIC sold fractions of their Rede D'Or stake in the IPO. "The boom in Brazilian healthcare is just starting," said Hans Lin, Bank of America's co-head of investment banking in Brazil. Share offerings and fundraisings will spark more M&A, he added. In a sign of the sector's relative fragmentation, country's top-five health insurers have a combined market share of 33%, compared with 68% in the United States, said Morgan Stanley. As deals among general hospitals also accelerate, analysts also see potential consolidation in specialized care fields such as oncology or ophthalmology clinics. Elsewhere, some startups base their business models on the need to rein in the country's surging medical inflation, which reached 11.5% last year, more than twice the overall average, said consulting firm Mercer Marsh. Diagnostic services startup Labi, which is raising a series B round, found a niche offering blood tests at 10% of the cost of better known firms such as Fleury SA FLRY3.SA . GOOD PROGNOSIS At least eight Brazilian healthcare companies are planning IPOs this year, such as hospital chains Care, Mater Dei and Kora Saude, inspired by Rede D'Or. The IPO activity also includes pharmaceutical companies such as Teuto, seeking a flotation worth at least 1 billion reais ($186.23 million), and Viveo, a manufacturer of health products planning to raise roughly $300 million. urn:newsml:reuters.com:*:nL1N2KA0Z5 Fundraising activity by healthtech companies is also growing, executives say. In addition to Labi, telemedicine provider Conexa, which is backed by private equity firm General Atlantic, is readying a new funding round of up to 100 million reais to acquire more companies. During the pandemic, demand for Conexa's online doctor visits went from 50 to 15,000 visits a day. "Brazilian medicine boards expanded telemedicine services that were previously forbidden, so the COVID crisis gave a huge boost to our business," said Guilherme Weigert, CEO at Conexa. ($1 = 5.3706 reais) <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Graphic-COVID-19 global tracker https://tmsnrt.rs/34pvUyi Graphic-Brazil's health and dental plans https://graphics.reuters.com/BRAZIL-HEALTHCARE/xlbvgdganpq/ Brazil hopes to roll out new COVID-19 aid package in 3 weeks, source says urn:newsml:reuters.com:*:nL1N2KL14T FACTBOX-Worldwide coronavirus cases cross 107.9 million, death toll at 2,474,715 urn:newsml:reuters.com:*:nL4N2AY3AS FACTBOX-Latest on the worldwide spread of the coronavirus urn:newsml:reuters.com:*:nL4N2KI0XB EXCLUSIVE-Brazil to buy 20 mln more doses of China's CoronaVac, governor says urn:newsml:reuters.com:*:nL1N2KB045 ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Reporting by Carolina Mandl and Tatiana Bautzer in Sao Paulo Editing by Christian Plumb and Matthew Lewis) ((carolina.mandl@thomsonreuters.com; +55 11 5644 7703; +55 11 97116-3806;))