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Canada

Walter Capital buys stake in Quebec funeral-home operator Athos

Éric Phaneuf is big on death.

Walter Capital Partners’ president has barely closed the acquisition of a minority stake in Quebec funeral-home operator Athos Services Commémoratifs that he’s already thinking about expansion.

On Tuesday, Montreal-based Walter said it paid about $30 million for a stake of between 40 per cent and 50 per cent in Athos, Quebec’s biggest funeral-home operator. The deal makes Walter the company’s lead minority investor.

With about 400 employees, Athos operates 21 funeral homes in Quebec under the Urgel Bourgie and Lépine Cloutier banners and five memorial garden cemeteries. The company is profitable and generates “substantial” cash flow, Phaneuf said without providing specifics.

“We want to expand beyond Quebec,” Phaneuf told the Montreal Gazette Tuesday in an interview. “Athos has a good platform, and the industry is still fragmented, so there is room for growth. Whether it‘s elsewhere in Canada or in the U.S. will depend on opportunities.”

Asked if mergers and acquisitions will be part of the strategy, he said: “Absolutely.”

Aging populations in Quebec and elsewhere underpin Athos’s prospects, Phaneuf said. Sizable barriers to entry also add to the industry’s attractiveness.

“People are getting older, and we only see that trend accelerating over the next 15 years,” he said.

Athos has “three or four years of visibility on revenue, in addition to owning hundreds of millions of dollars of real-estate assets. So this is a defensive investment, less sensitive to the economic cycle.”

Top executives of Athos are keeping a stake in the business, which shows their commitment to the company, Phaneuf said.

“They wanted a partner on which they could count to help build a much bigger company,” he said.

Joining Walter as a minority investor is Quebec’s Bourgie-Bovet family — which made a name for itself over decades by running the Urgel Bourgie funeral homes that Athos acquired in 2012.

The family “accepted Walter Capital’s invitation to invest in Athos because we can count on an industry leader with a proven investment model to accelerate business growth,” Sylvie Bovet, vice-president of the Bourgie-Bovet family office, said in a statement.

Based in Montreal, Walter is a private equity firm with stakes in eight other companies — including eyeglass retailer BonLook, food distributor AlimPlus and medical clinic operator Epiderma. Current Quebec Economy Minister Pierre Fitzgibbon spent time as the firm’s managing partner before making the jump into politics last year.

Montreal’s Somers family created Walter in 2015 with $100 million in initial capital.

“We are a patient investor, which is somewhat atypical in the industry,” Phaneuf said. “Private equity firms typically buy companies to cut costs and re-sell their stake after three years, but that’s not our philosophy. We take the time to build companies.”

ftomesco@postmedia.com

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