Advent buys Mexican funeral chain in $317m LBO

Grupo Gayosso, Mexico’s largest funeral services company, has been acquired by Advent International in a transaction valued at $317 million, including $40 million in subordinated debt.

Advent International has purchased century-old Mexican funeral chain Grupo Gayosso in a $317 million (€223 million) transaction.

The deal includes $195 million in acquisition financing led by Scotiabank of Canada and Ontario Teachers’ Pension Plan, as well as a “$40 million subordinated loan with an eight-year bullet payment – a first in Mexican private equity”, the firm said.

Grupo Gayosso’s national network spans 16 cities and includes 25 funeral homes, 21 cemeteries, six mausoleums, 16 chapels and 12 crematories.

Alfredo Alfaro, a partner in Advent’s Mexico City office, said in a statement: “The company has critical mass, strong brand recognition and consumer loyalty, and healthy cash flow. Additionally, it has become the most efficient operator and consolidator in the market. We see significant opportunities to grow by acquiring incumbent players in key cities not served by Gayosso and by opening new facilities in select locations.”

Advent projects demand for funeral services to grow as Mexico’s population ages and its middle class expands and has greater disposable income, the firm said.

In July, Advent closed the largest-ever fund dedicated to the region on $1.3 billion, an amount that has since been matched by Brazilian firm GP Investments’ fourth fund.

Since it became involved in the region in 1996, Advent has invested in 34 Latin American companies and has been pioneering private equity in Mexico.

Last year, it sponsored the first private equity deal in Mexico to use cash flow-based debt, the buyout of Mexico’s largest discount clothing retailer Milano. Valued at $200 million, the deal included $90 million in cash flow-based debt.

More recently, in January, Advent purchased Mexican restaurant chain La Mansión for an undisclosed amount.

The 23-year-old buyout firm has offices in 15 countries on four continents.