Dignity, the UK’s leading funeral services business is owned by Castlenau (see our interview on 4 October). It is buying Farewill, a company in Augmentum Fintech’s portfolio at a valuation for the entire business of £12.9m.

Farewill, founded in 2015 by Dan Garrett (its current CEO) and Tom Rogers, offers a range of later-life products, including wills, probate, at-need funerals, and pre-paid funeral plans. Recognised as the “National Will Writing Firm of the Year” four times and as the “Consumer Business of the Year”, Farewill has helped raise £1.1bn in pledges to charitable organisations.

Castlenau says that this transaction has important strategic benefits for both companies, allowing them to combine their strengths and continue to serve their distinct customer bases, collectively reinforcing Dignity’s position as the UK’s largest and most comprehensive end-of-life service provider.

Castlenau says that the acquisition will allow Dignity to broaden its audience, enhance customer experience, expand its product offering, modernise its technology infrastructure, and further strengthen its talent pool. Farewill also brings an established will and probate bank and a well-established brand, enabling Dignity to engage with potential customers earlier in their later-life planning journey.

The acquisition will be financed through a share-for-share exchange, with the majority of Farewill shareholders (including Augmentum Fintech) becoming Castelnau shareholders. In exchange, Castelnau will increase its holding in Valderrama Limited (the joint venture with Sir Peter Wood’s SPWOne Limited through which Castelnau holds its stake in Dignity). To fund its share of the acquisition, Castelnau expects to issue approximately 9.6m shares based on an issue price of 99p per share.

Subject to the successful completion of the transaction, Castelnau will increase its ownership of Valderrama by 5.6m shares to 199.9m shares, representing 66.0% of Valderrama’s issued share capital.

Completion of the acquisition is subject to FCA approval and is not expected to occur before 1 January 2025. An announcement will be made in due course confirming the final number of Castelnau Group shares issued in relation to the transaction.

Augmentum Fintech says its understanding of the terms of the proposed acquisition implies no material change to its NAV. It led Farewill’s £7.5m Series A fundraise in January 2019, with a £4m investment, participated in its £20m Series B, led by Highland Europe in July 2020, with £2.6m, and in its further £4.8m fundraise in March 2023, with £0.8m. [That’s £7.4m invested in total. Augmentum’s annual report does not break out the value it was ascribing to this at its last year end, but it looks to us as though this has not been a profitable investment for the fund, so far.]

CGL / AUGM : Castlenau’s Dignity buys Augmentum Fintech’s Farewill