UPDATE July 8, 2016.
Global private equity firm CVC Capital Partners has made a $1.1 billion buyout and privatization offer for Asia’s largest funeral services provider, Nirvana Asia Ltd. (HKEX: 1438). After the closing, Nirvana’s founder Tan Sri Kong and CVC will be the company’s two largest shareholders, and Kong will continue in his role as Nirvana’s CEO.
The cash offer of HK$3.00 per share represents a 37.6% premium to the 30 day average closing price of Nirvana shares prior to the offer.
Nirvana Asia can honestly tell potential customers that their product is “to-die-for”, says the Financial Times. “The Malaysian company has rolled out an unusual business model across Southeast Asia: pre-selling burial plots and funeral services to the living.”
“We don’t use conventional methods to sell our products,” says Kong Yew Foong, an executive director and son of founder Tan Sri Dato’ Kong Hon Kong. “We don’t wait for the customers to come in.”
Nirvana Asia, which calls itself the “largest integrated death care service provider in Asia,” offers premium tombstones, columbarium facilities, funeral services, and burial plots in six countries across Asia, including Malaysia, Singapore and Indonesia, mostly to ethnic Chinese Buddhists and Taoists. The company employs over 700 staff across the region.
Kuala Lumpur, Malaysia-based Nirvana went public on the Hong Kong stock exchange in December 2014, raising HK$1.9 billion ($250 million) in a so-called “death care” IPO, following in the footsteps of its peer Fu Shou Yuan, a luxury Chinese cemetery and funeral chain, that raised about the same amount a year earlier, but has been trading recently at much higher valuation multiples than Nirvana.
Nirvana’s largest, most-lucrative, and fastest-growing business is in so-called “niches,” or reserved spots for relatives to leave the urns of the deceased.
The company also has significant real-estate holdings in Malaysia. Overall, the company has a land bank of 3 million sqm, most of it in Malaysia, which reportedly generates more than 80% of revenue. The company had revenues of $149 million in 2015. Nirvana’s cemeteries command “excellent Feng Shui” alongside breathtaking landscaping, the company says.
Nirvana began operations at its Singapore columbarium facility in 2009 after its acquisition and renovation. It is the only commercial columbarium facility in Singapore. The company uses high quality materials in the construction of niches and currently has plans to expand its Singapore facilities to increase the capacity by 24,640 double niches.
Tan Sri Dato’ Kong, who founded the company in Malaysia in 1990 and serves as chief executive, owns 43% of the company, which employs his five children. Born to a rubber tapper in Malaysia in 1954, he was prompted to found Nirvana by the death of his father-in-law in 1985, at a time when there were no private cemeteries or premium funeral services in Malaysia.
CVC is advised by JP Morgan and Clifford Chance. Nirvana is advised by UBS and Sullivan and Cromwell. Fully committed debt financing is being provided by CIMB.
CVC Capital Partners, headquartered in Luxembourg, is one of the world’s leading private equity and investment advisory firms. Founded originally in 1981 as the European arm of Citicorp Venture Capital, the CVC Group today employs some 300 people throughout Europe, Asia and the US.
The firm was spun out from Citicorp in 1993, as an independent private equity firm. The CVC team’s local knowledge and extensive contacts underpin a proven track record of over 30 years of investment success.
CVC manages capital on behalf of over 300 institutional, governmental and private investors worldwide, having secured commitments of more than US$71 billion in private equity, credit and growth funds.
A few weeks earlier, CVC Capital acquired a majority stake in German gaming company Tipico for close to €1.5 billion ($1.68 billion). In December 2014, CVC acquired Sky Betting and Gaming for £800 million, consisting of five core brands Sky Bet (sports betting), Sky Vegas (online in-browser casino), Sky Casino (premium online casino, live table games), Sky Poker (online poker) and Sky Bingo (online bingo). CVC also made previous investments in British sports betting operator William Hill (2002 IPO exit, at 314% ROI) and the IG Group, a digital trading and betting platform.
CVC Capital also gained control of the Formula One Group in 2006 in a leveraged buyout funded with two loans – $965.6 million from its Investment Fund IV and $1.1 billion from RBS, turning the firm into the biggest winner in the history of the Formula One grand prix.