Funeral Business Makes David Kong One Of Malaysia’s Richest
When David Kong had the idea for a funeral-services business in Malaysia back in 1985, no one would listen. Banks wouldn’t lend him money. Local authorities wouldn’t approve his application to open a cemetery. He quickly learned that profiting from a loss was not seen as a “decent” way to earn a living, though in the U.S. and elsewhere the industry had long thrived.
But Kong persevered. Today his Nirvana Asia is Southeast Asia’s largest full-service funeral company. It embalms, buries and cremates. It designs caskets, builds tombs and provides niches for mortal remains. It organizes bereavement services, most often with the rituals and prayers of ancient Buddhist and Taoist cultures.
It’s a strange business. The products and services are part of the realm of culture, religion and tradition. The custodians are monks and priests and the ancient spiritual texts of last rites. “Every life deserves a curtain call,” he says during an interview at his 18-story Nirvana Center in downtown Kuala Lumpur. “We celebrate life and its achievements and make sure that the transition to the other world is dignified, respectful and easy for both the deceased and their loved ones.”
It’s also been a lucrative business for the 61-year-old Kong, who is also known as Kong Hon Kong. Last month he took the Hong Kong-listed company private in a deal with London’s CVC Capital Partners that valued the company at $1.1 billion. The firm bought a 43% stake while Kong collected $200 million; he still owns 38%, down from 42.7%. He’ll continue to run the company. An earlier investor, Orchid Asia, holds the other 19%.
In March Kong debuted on FORBES ASIA’s list of Malaysia’s 50 richest people at No. 34, with a net worth of $550 million. But his fortune is now estimated at $720 million.
CVC is investing in a big operation. Nirvana runs 13 cemeteries, 14 columbaria, 2 funeral homes and 6 crematoriums in Malaysia, Singapore, Indonesia, Thailand and China. It controls 31% of the death-services market in Malaysia and 35% in Singapore, according to research firm Frost & Sullivan. Those shares are at least five times larger than its nearest rival in each country. It’s expected to generate $52 million in net profit this year on revenue of $171 million, according to Bloomberg. “Kong has woven magic,” says Liew Kee Sin, chairman of Eco World Development, who has known him for two decades. “He has changed a social taboo into a business that invokes the blessings of the gods and puts you at ease with the inevitable. People now talk about their own death, plan for it and are no longer afraid of it.”
Following a strategy of market segmentation, Nirvana offers its packages at multiple price points. A burial plot in a premium location could cost $2.5 million and a gold-plated coffin as much as $350,000. Its more than 3,000 agents sell what are called “pre-need” packages to customers as young as 40 who are planning ahead. Some 85% of the company’s revenue comes from selling services that may not be used for years.
Nirvana agents range in age from 30 to 45, defying the notion that death care is a gloomy industry that would have trouble attracting young talent. Says Casey Liew, 33, a former bank executive and a graduate of Adelaide Business School who joined Nirvana in 2014 as assistant manager, corporate sales & marketing: “This is a great learning ground. The company understands the customer’s needs, is constantly innovating and creating products for different cultural sensibilities, backgrounds and even the world beyond.”
In Kuala Lumpur, Nirvana billboards are ubiquitous, making the company a household name. One of its brands, Baby Paradise, caters to parents who have lost a fetus or a child. Its “White Ladies” are recognized for their cosmetology and makeup expertise and their sensitivity in dealing with women customers. In Indonesia, where Nirvana is the second-largest player, its services are sold under the brand name Alam Lestari Hijau, or “sustainable, natural, green.”
Nirvana’s Memorial Park in Semenyih, outside Kuala Lumpur, has become a tourist attraction. Its memorial hall draws on ancient Chinese history, architecture and intricate gold ornamentation to promote a sense of regal splendor and status. A museum holds the personal effects of celebrities and political leaders buried there. There’s also Southeast Asia’s first Chinese stone calligraphy gallery, constructed at a cost of $5 million. Images of a crystal-embedded Buddha and the Goddess of Mercy are everywhere. Outside, swaying bamboos, a glistening lake and landscaped pathways surround tombs covered with horsehead-shaped roofs. Many of Malaysia’s rich and famous have booked plots for themselves and their families here.
Kong was certainly not one of these when he was growing up. The third of 10 children, he was born to a family of rubber tappers in Kuala Lipis in northern Malaysia. His mother pedaled him and his brother, neither one a teenager yet, at 2 a.m. every day to work on the rubber estates. Then at 7 a.m. the boys would start their long walk to school, only to return home after school to more work–bundling and delivering latex–before they went to bed. “My mama would buy me outsize shoes so they would last longer,” he says. “The only new clothes I ever wore were school uniforms.” At 16, out of “sheer desperation,” the brothers left the village for Kuala Lumpur. There they distributed toothpaste, soap and other consumer goods. Demand was brisk, but creditors were always delaying payments, and margins were razor-thin. Kong moved on in 1985 to launch a moneylending business.
Meanwhile his father-in-law died and he was entrusted with finding a burial ground. But there were no private cemeteries in Malaysia then. The community cemetery was strewn with weeds, unkempt pathways and haphazard tombstones. As he stepped on some of them he found himself apologizing to the deceased. Then came the nightmare of dealing with casket makers and organizing a prayer service. The process was so chaotic that “demand for a better service was self-evident,” says Kong. “Death is a certainty. Whoever is born must die. That means a demand in perpetuity.”
Selling the concept, however, was difficult. Kong might have abandoned it, but a recession hit Malaysia in 1987, and as liquidity evaporated his credit business went belly-up. He was at square one again, this time with a young wife and two children in tow. Plagued by doubts about profiting from such a delicate business, he was fortunate to have a friend who was a monk to get him past the psychological barrier. And a geomancy master helped him identify land in the shape of a dragonhead with good feng shui. He won over a reluctant landlord with a profit-sharing proposal and gained the right to use a 50-acre parcel for burials. But the local government rejected his application. For the next two years Kong would troop down to the land department nearly every day. In 1990 he finally won approval and called his new company Nirvana.
His first customer was a friend who bought a plot after his uncle died. Soon word spread about the new “death company.” Before the year was out, Nirvana was turning a profit. But not believing that the land had any resale value, banks still wouldn’t lend Kong money. So he kept an eagle’s eye on cash collections and landholding costs. Any surplus went into accumulating more land and beautifying the cemetery. Skeptics began turning around as he rolled out one innovation after another and profits soared. “For the first time lenders, investors and bankers began to look at my business as legitimate, though unusual,” he says.
But he hadn’t quite arrived yet. In 1996 Malaysia’s stock market was on a tear. Nirvana applied for a listing, but it didn’t have any peers or valuation model to judge its viability. “No one knew how to deal with it,” he says. The application was rejected, but once Kong was finally able to launch his IPO in 2000, the way was paved for very quick growth. “I would work 16 hours a day, supervise every detail for every service personally till it was perfect,” he says.
Kong relisted Nirvana in Hong Kong in 2014, fetching $246 million and giving him the muscle to expand into Thailand, Vietnam, Hong Kong, the Philippines and China. The private equity deal will speed that expansion. “When I started out, I simply had a dream to provide seamless, worry-free death services,” he says. “It has made me more money than I ever dreamt, and it has also ensured that I will have a happy ending when the time comes.”
Indeed, his burial plot stands right on top of the hill at his Memorial Park in Semenyih.
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