Europe’s declining population has long raised concerns about its economic prospects. Governments are seriously concerned about this. Elon Musk has raised alarm about this trend. But for some it turns into big business.
Private equity-backed Funecap Idf SAS has spent about 1 billion euros ($1.1 billion) to buy more than 300 crematoria and funeral centers, mostly in Europe, home to 17 of the 20 countries with the highest death rates. mortality rate.
The French firm, backed by British financial investor Charterhouse Capital Partners LLP and France’s Latour Capital, is cashing in on high cemetery costs, mobility needs and religious secularization that have fueled the need for waste incineration and alternatives to traditional church services.
Currently, one in five Europeans is 65 years of age or older. By 2050 it will approach 30%. And unlike North America, which faces a similar threat of population decline, Europe has limited space to bury them when they eventually die.
“The funeral industry is about more than just digging holes,” said Thierry Guisserot, founder and CEO of Funecap. “This is an infrastructure game.”
The European cremation market in particular is benefiting from strong organic growth averaging 5% and 7% per year, he said. Burning waste has grown in popularity, especially in countries with Catholic roots, where regulations have relaxed in recent decades.
Funecap acquired Netherlands-based Facultatieve Technologies Ltd, a global leader in cremation equipment, in 2022 and recently became a partner at the Rhein-Taunus-Krematorium GmbH, the largest in Germany. RTK CEO Judit Könsgen said other investors have also come knocking.
According to Bjorn Wolf, founder of Mymoria GmbH, the market for undertakers and crematoriums in Europe is more fragmented than in other developed countries, especially Germany. His funeral services company has also been buying up morticians in recent years and wants to continue doing so.
“Family owners are retiring and their children no longer want to run the business,” Wolf said. By taking over management, Mymoria will be able to consolidate certain areas, such as administration, and improve cost efficiency.
Meanwhile, the cash flow in the sector is predictable – people must die. Mortality rates are expected to rise in the coming years as the baby boomer generation ages, which will likely boost revenue for companies like Funecap and Mymoria.
Another source of income, which is considered more controversial, is the sale of metal scraps left over from the cremation of human bodies.
Many people have gold teeth or artificial hips or knees containing titanium, cobalt or chromium. In most European countries, metals are recovered from the ashes and sold to metal recyclers. This is not illegal as long as relatives are informed.
Many crematoria say they donate all or part of their proceeds. According to Jan-Willem Gabriels, chief executive of metal recycling company OrthoMetals A/S, the donation process varies greatly across European countries: Germany has no national rules on the matter, while Sweden requires crematoria to send proceeds to a government bequest fund.
“Sometimes it’s 100%, sometimes it’s 50%,” Gissereau said of Funecap’s donation policy. “Because a corporation is not a charity, you need to use the proceeds for its benefit.”
At the same time, RTK’s Kensgen said that “some investors seem to believe that crematoriums are a money-printing machine,” but this idea is delusional.
“You have to invest a lot in equipment and processes, and worry about maintaining them, but if you know what you’re doing, you can get adequate returns,” she said.