A private equity firm is buying up crematoria and funeral homes to capitalize on Europe's aging population. 'It's an infrastructure play
Europe's declining population has long raised concerns about its economic prospects. Governments are seriously concerned about it. Elon Musk is sounding the alarm about this trend. But for some, it's turning into big business.
Funecap Idf SAS, a privately funded company, has spent about 1 billion euros ($1.1 billion) to buy more than 300 crematoriums and funeral centers mostly in Europe, home to 17 of the 20 countries with the highest mortality rates.
The French company, backed by British financial investor Charterhouse Capital Partners LLP and French company Latour Capital, is betting on the high cost of cemeteries, the need for mobility and the secularization of religion that has led to the need for incineration and alternatives to traditional church services.
Currently, one in five Europeans is aged 65 or older. By 2050, that figure will approach 30%. And unlike North America, which faces a similar threat of population decline, Europe has limited space to bury people when they eventually pass away.
"The funeral industry is not just about digging holes," says Thierry Guissereau, founder and CEO of Funecap. "It's an infrastructure game."
The European cremation market in particular is enjoying high organic growth, averaging 5% and 7% per year, he said. Cremation is gaining popularity, especially in countries with Catholic roots, where regulations have been relaxed in recent decades.
Funecap acquired Netherlands-based Facultatieve Technologies Ltd, a global leader in cremation equipment in 2022, and recently partnered with Germany's largest crematorium, Rhein-Taunus-Krematorium GmbH. RTK CEO Judith Könsgen said other investors have also knocked on the company's door.
According to Björn Wolf, founder of Mymoria GmbH, the market for mortuaries and crematoria in Europe is more fragmented than in other developed countries, especially Germany. His company, which provides funeral services, has also been buying up mortuaries in recent years and wants to continue to do so.
"Family owners are retiring and their children no longer want to run the business," Wolf says. By taking over, Mymoria will be able to consolidate some areas, such as administration, and improve cost efficiency."
Meanwhile, cash flows in this sector are predictable - people have to die. Mortality rates are expected to accelerate in the coming years as the baby boomer generation ages, which is likely to drive up revenues for companies such as Funecap and Mymoria.
Another source of income that is considered more controversial is the sale of metal scraps left over from the cremation of human bodies.
Many people have gold teeth, artificial hips or knee joints containing titanium, cobalt or chromium. In most European countries, these metals are extracted from the ashes and sold to metal recyclers. There is nothing illegal about this as long as the relatives are informed.
Many crematoria say they donate all or part of the proceeds. According to Jan-Willem Gabriels, head of metal recycling company OrthoMetals A/S, the donation process varies greatly from one European country to another: Germany has no national rules on the matter, while Sweden requires crematoria to send proceeds to a state heritage fund.
"Sometimes it's 100 percent, sometimes it's 50 percent," Gissero says of Funecap's donation policy. "Because a corporation is not a charitable organization, you have to use the funds you receive for the benefit of the corporation."
At the same time, according to RTK's Koensgen, "some investors seem to believe that crematoria are a money-printing machine," but this idea is delusional.
"You have to invest a lot in equipment and processes and take care of maintenance, but if you know what you're doing, you can achieve an adequate return," she says.