Season 3, Post 35: Benjamin Franklin was right…

Perhaps the most famous observation made by Benjamin Franklin, one of America’s Founding Fathers, is that “in this world nothing can be said to be certain…

Season 3, Post 35: Benjamin Franklin was right…

Perhaps the most famous observation made by Benjamin Franklin, one of America’s Founding Fathers, is that “in this world nothing can be said to be certain, except death and taxes” Accept this maxim and it is only a step to recognising that arguably the biggest problem – or future trend – that the world faces is how to manage its ageing population.

Consider that there are currently 900m people aged over 60 in the world. However, by 2050, this figure could reach 2bn (or 25% of the world’s population) and a remarkable 3.2bn by 2100. The issue is particularly pronounced in Europe, which has one of the fastest ageing populations globally. Between now and 2050 the ratio of elderly to members of the working population is set to rise from 3-in-10 to 5-in-10. To compound matters, 80% of people over the age of 65 have one chronic disease, while 50% have two or more chronic conditions (all data per the United Nations). 

The implication of the above is that there will be a clear increase in demand for both accommodation for the elderly and the provision of new medical services. Much of the burden of this will likely fall upon the private sector owing to the lack of current available supply combined with constrained state budgets. An additional concern is that many existing facilities need upgrading. Take France as an example. Just 20% of services for the elderly are provided by the private sector currently. Meanwhile, some 20% of public care homes need to be rebuilt since they are, on average, at least 40 years old and hence in need of renovation. The estimated cost of this is put at least at €12bn (all data per Orpea, a leading private player in the field).   

Your author recently found himself in Paris – his first trip abroad for business since March 2020 – and was lucky enough to visit one of Orpea’s facilities to get an insight into both the opportunity and the challenges the world will face in terms of providing for the elderly. The Trocadero facility is one of the most modern in its portfolio, located close to the Eiffel Tower in one of central Paris’ swankiest districts. It might almost be possible to imagine you were visiting a hotel rather than a care home. Rooms are at least 22 square metres in size with the largest suites extending to 32 square metres. There is a top-floor restaurant with skyline views and an impressive menu. There is also a library and a physiotherapy room. Admittedly those who choose to stay are paying at least €200/night for the privilege, but there is clear demand, with the facility currently operating at almost full capacity. We expect only more innovation in this space going forward.

15 September 2021

The above does not constitute investment advice and is the sole opinion of the author at the time of publication. Heptagon Capital is an investor in Orpea. The author of this piece has no personal direct investment in the business. Past performance is no guide to future performance and the value of investments and income from them can fall as well as rise.


The document is provided for information purposes only and does not constitute investment advice or any recommendation to buy, or sell or otherwise transact in any investments. The document is not intended to be construed as investment research. The contents of this document are based upon sources of information which Heptagon Capital believes to be reliable. However, except to the extent required by applicable law or regulations, no guarantee, warranty or representation (express or implied) is given as to the accuracy or completeness of this document or its contents and, Heptagon Capital, its affiliate companies and its members, officers, employees, agents and advisors do not accept any liability or responsibility in respect of the information or any views expressed herein. Opinions expressed whether in general or in both on the performance of individual investments and in a wider economic context represent the views of the contributor at the time of preparation. Where this document provides forward-looking statements which are based on relevant reports, current opinions, expectations and projections, actual results could differ materially from those anticipated in such statements. All opinions and estimates included in the document are subject to change without notice and Heptagon Capital is under no obligation to update or revise information contained in the document. Furthermore, Heptagon Capital disclaims any liability for any loss, damage, costs or expenses (including direct, indirect, special and consequential) howsoever arising which any person may suffer or incur as a result of viewing or utilising any information included in this document. 

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