이 기사는 2020년 04월 14일 08시00분 thebell에 표출된 기사입니다

South Korean buyout fund VIG Partners has acquired a controlling stake in Preedlife, the leading funeral service provider in the country.

VIG has reviewed investing in funeral service providers for more than 10 years. After its thorough review, the firm acquired Jounlife in 2016, betting on growth potential of the funeral service sector amid aging society.

The buyout firm’s acquisition of Jounlife was not a short term investment. The firm analyzed the general industry structure, estimated growth potential and tapped various companies ranging from small and medium-sized funeral service providers to major ones.

Operating Jounlife over the past three years, VIG is confident that the industry will grow further. It is important for funeral service providers to increase their size to lead the highly fragmented industry. They can do that by implementing bolt-on strategies, but it has limitations.

VIG has constantly tapped major funeral service providers and finally acquired Preedlife, the largest funeral service provider in the country. The buyout firm has spent about six years solely to acquire Preedlife.

If Preedlife and Jounlife are combined, the new consolidated company will have a combined customer base of 1.5 million subscribers and prepaid plans of 1.2 trillion won. As of September 2019, Preedlife and Jounlife had prepaid plans of 912.2 billion won and 133.6 billion won, respectively.

According to the Fair Trade Commission (FTC), the country has 86 funeral service providers with more than six million subscribers as of September 2019. The industry’s total prepaid plans stand at 5.58 trillion won, which makes the combined company account for around 20 percent of the market share.

The deal isn’t likely to breach antitrust regulation considering the fragmented industry structure. VIG will be able to become a dominant player with the firm widening gaps with rivals such as Boram Sangjo and The K life.

Domestic funeral service industry has been growing over the past few years with the industry entering into the shake-out phase. According to the FTC, as of September 2019, the number of funeral service providers here decreased by six compared to the end of first half of 2019. In the meanwhile, the number of subscribers increased by 410,000 and prepaid plans increased by 318.5 billion won over the same period. The funeral service industry’s total prepaid plans have been on the rise compared to 3.7 trillion won in September 2015.

Market observers expect consolidating Jounlife and Preedlife will accelerate both growth and profitability.

(By reporter Han Hee-yeon)