A matter of life and death: China's Sunshine Life Insurance takes a stake in a Hong Kong funeral service provider
Mainland market for funeral services expected to grow rapidly as population ages
Beijing-based Sunshine Life Insurance is taking a step into the growing market for funeral services in China with the acquisition of a 7.3 per cent stake in Hong Kong-listed funeral service provider Fu Shou Yuan International Group for an estimated HK$775.6 million.
Sunshine will buy 151.48 million shares from FSG Holdings via a placement at a price of HK$5.12 a share, according to a company filing to the Hong Kong stock exchange on Monday. The shares closed at HK$5.10 on Friday. The share sale represents approximately 7.3 per cent of the issued share capital of the company.
With the investment, Sunshine is betting on the robust growth of China's death care market, as it seeks better investment options in the face of volatile stock markets and a sluggish property sector. The demand for burial and funeral services will soar in the next few years, analysts said, due to China's rapidly ageing population and rising income levels.
"China is facing a soaring number of old people, and the death rates are expected to increase," said Ronald Wan, chief executive of Hong Kong-based Partner Capital.
The number of elderly people above 60 years old was 212 million in 2014, about 15.5 per cent of the total population, according to official statistics. The government has forecast that the number of the elderly over 60 years old will account for over 20 per cent of the total population by 2025.
According to UN estimates, the death rate in China is expected to increase to 9.5 per thousand people in 2023. It stood at 7.2 per thousand in 2014.