🪦 The funeral industry — "It‘s an infrastructure play!" 🥹
Last time I looked at the funeral industry (aka the deathcare industry) was when I examined well-known UK value investor Gary Channon's portfolio which featured the largest listed operator Dignity Funerals Ltd at the time. A firm he later helped to take private.
Private equity has been attracted to the industry for a while. Bloomberg has just taken a look at some of the key drivers:
"Private-equity-funded FUNECAP GROUPE has spent around €1 billion ($1.1 billion) to buy more than 300 crematoriums and funeral centers mainly in Europe, home to 17 of the top 20 countries with the highest death rates.
The French firm, backed by 🇬🇧 financial investor Charterhouse Capital Partners and 🇫🇷 Latour Capital, is cashing in on the high cemetery costs, mobility needs and religious secularization that have raised the need for incinerations and alternatives to traditional church-driven services.
One in five Europeans is currently 65 years or older. By 2050, it will be closer to 30%. And unlike 🇺🇸 & 🇨🇦 — which is facing a similar population decline threat — Europe has limited space to bury them when they eventually pass away.
'The funeral industry is way more than digging holes 🕳️,' said Thierry Gisserot, Funecap’s founder and chief executive officer. “It’s an infrastructure play.”
Europe’s cremation market, in particular, benefits from high organic growth of 5️⃣ to 7️⃣% annually, he said. Incinerations have boomed in popularity, particularly in countries with Catholic roots where rules have eased in recent decades.
Funecap acquired Netherlands’ Facultatieve Technologies, the world leader of cremation equipment, in 2022 and recently became a partner in Rhein-Taunus-Krematorium GmbH, the largest one in 🇩🇪. RTK’s CEO Judith Könsgen said other investors had also come knocking ✊.
The market for morticians and crematoriums is more fragmented in 🇪🇺 than in other developed nations, particularly in 🇩🇪, according to Björn Wolff, founder of mymoria GmbH. His company, which provides funeral services, has been buying up morticians in recent years, too, and wants to continue doing so.
“Family owners are retiring and their children no longer want to run the business,” Wolff said. By taking over, Mymoria is able combine certain areas like administration and improve cost efficiency.
💡Meanwhile, cash flow in the sector is predictable — people have to die. Deaths are expected to gain speed in the coming years as the baby boomer generation ages, which will likely drive up revenues for companies like Funecap & Mymoria.
⚠️ Another source of income that is considered more controversial is the sale of metal scraps left over after human bodies have been cremated…In most European countries, the metals are removed from the ashes and sold to metal recyclers. That’s not illegal as long as relatives are informed."
(+++Opinions are my own. Not investment advice. Do your own research.+++)
#privateequity
