Pure Cremation snags £7.5 million as investor holds door open for IPO or buyout
Direct cremation costs a fraction of a traditional funeral.
UK specialist Pure Cremation has attracted £7.5 million in funding from Puma Investments amid hopes that a growing trend for simpler after-death goodbyes will open the door for a stock market flotation or US buy-out.
Eliot Kaye, an investment director at Puma, told the Press Association that his firm was putting money behind what he hopes is a “winning combination” of an experienced management team with a “very disruptive business model within a very established market”.
Pure Cremation – founded in 2015 by Bryan and Catherine Powell – specialises in what is referred to as direct cremation, which involves the company collecting and caring for the deceased, who are then cremated without a service or mourners present.
Ashes are returned to the family within weeks.
Mr Kaye said he has been impressed with the company’s traction over the last six months since it pumped the first £5 million into Pure Cremation back in November.
Puma will put the remaining £2.5 million into the business over the coming months, helping open the company’s new-build crematorium in Andover which is now under construction and will begin serving direct cremation clients in October 2018.
It means Pure Cremation will no longer have to rely on crematorium sites owned by other businesses to deliver its services, which Mr Kaye said “will allow the business to scale significantly”.
“So as a growth capital investor it’s got all the ingredients that we would look for to get the best risk-adjusted return for our investors,” he added.
Pure Cremation said it served more than one thousand families last year, and now accounts for around 5% of all cremations in the UK.
Having grown to a team of 21 staff, it expects to carry out 2,000 direct cremations in 2018.
The trend is starting to take hold in the UK, with established rival Co-op Funeralcare recently announcing the launch of its own direct cremation service.
The country is also I think getting less religious and also less traditional across the board. Eliot Kaye, Puma Investments
While direct cremation is undoubtedly cheaper – with Pure Cremation’s prices starting at around £1,195 compared to the average £4,078 for a full funeral service – Mr Kaye said cost was not the driving factor.
“The country is also I think getting less religious and also less traditional across the board,” he said.
“Why can’t people have that celebration (of life) in a place that befits their character and their life – be it the golf club, the beach, the bridge club, the pub, whatever?”
He added: “You only have to read the recent announcements from the largest listed player Dignity who are basically saying that the old traditional model of a funeral director and a full suite of services is proving harder to sell.”
Mr Kaye – who now is a director of Pure Cremation – said the model has been more popular in the US.
“That says to me two things – first of all, obviously, that there is huge growth potential in the market – number one.
“But number two – there are going to be more established American-based providers who may very well be interested in expanding into the UK and could therefore joint venture or acquire these guys in due course if they get it right.”
But a stock market flotation could also be on the cards.
“Whenever one invests into a business, one has at least one if not one and a half eyes on the exit and for us there are multiple options.
“I mentioned floating the company. Also, of course, where there are major players in the market, a buy-in effectively by one or more of them is always on the table, to sell to a larger player.”
He said those options could be available as soon as five years down the line.