South Korea’s private equity firm VIG Partners will invest about 65 billion won ($59.5 million) in Seoul-based funeral service provider Joeunsangjo Co., in a move to reap profits from growing funeral service industry amid rise in aged population and single-family homes.

The private equity on Thursday said it signed a contract worth 65 billion won to acquire 84 percent stake in Joeunsangjo and issue new shares with the funeral service provider’s shareholders. The shareholders’ names were undisclosed.

Joeunsangjo that has stood as a medium-sized funeral service provider will become the leader in local funeral service market in terms of capital once the investment deal is completed. Currently, The K leads the local market with 50 billion won in capital followed by Bumosarang Corp. with 20 billion won while others are capitalized at less than 1 billion won. Joeunsangjo’s top management including the company’s chairman Kim Ho-chul will maintain their shares in the funeral service provider after the stake sales.

VIG Partners has been interested in the bourgeoning sector yet lacking funding due to traditionally negative sentiment towards making business from funeral rituals.

It is also expected to turn the investment into a success based on its investment experience in insurance firm that shares similarities in business operation with funeral service provider as both collect payment in advance from customers, market observers say. The buyout fund gained a handsome return on resale of Tongyang Life Insurance Co. after it successfully revamped the insurer’s corporate value.

VIG Partners plans to appoint new executives with expertise in management while keeping the funeral service provider’s key directors including Kim.

By Kang Doo-soon

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]