Black Affairs, Africa and Development
South African billionaire Christo Wiese prepares for move to UK
“When David and Goliath go and start in a new country, they are both the same size,” says Christo Wiese. The 73-year-old South African retail billionaire is musing on the threat to his African supermarket chain Shoprite from the world’s biggest retailer, Walmart, which has been trying to get a firm foothold in Wiese’s home continent.
But Wiese, speaking from his office on an industrial estate in a dreary suburb of Cape Town, could just as easily be talking about his own move into the UK.
Not content with an interest in more than 5,000 stores in more than 20 countries via his stakes in South-African-based Pepkor, Steinhoff and Shoprite, Wiese has shrugged off the family past to move back to the UK with intent.
His family once got their fingers burnt with investments through Brown & Jackson – the vehicle that once owned Poundstretcher and the now defunct discounters Your More Stores and What Everyone Wants. Now Wiese’s investment vehicle Brait has snapped up New Look, the fashion retailer, British gym chain Virgin Active and a 19% stake in grocery chain Iceland. He says it still has access to a “war chest” of up to £1bn to spend on acquiring new businesses.
Meanwhile, his Pepkor business has also piled close to £20m into launching Pep & Co, a British clothing discounter run by former Asda boss Andy Bond, which is trying to take supermarket-cheap clothing to the high street. Even Wiese describes the chain – which should have 50 stores open by mid September, two weeks behind its two month opening schedule – as a “bold idea”.
“We are very happy with the results [at Pep & Co] thus far,” says Wiese , who made his fortune turning his father’s small retail business into an international empire. “If the concept works, then, the way we operate, we tend to roll out aggressively.”
Bond has been out in South Africa this week, but Wiese, who is firmly on the Forbes rich list with a fortune it estimates at £4.4bn, will not put a date on when he might decide if Pep & Co would be a safe bet for expansion. “When the model is exactly right and the infrastructure is in place then we will start to push the button,” he says.
Meanwhile, Wiese says Brait is constantly being approached with investment ideas. The vehicle has been linked to a potential buyout of Bradford-based supermarket chain Morrisons and a buyout of Bhs, the chain that Philip Green eventually offloaded for £1 this year.
Wiese, who will join Green and other retail luminaries such as Ikea’s Ingvar Kamprad and Zara founder Amancio Ortega in the World Retail Congress’s Hall of Fame at a ceremony in Rome next week, says he does not think he missed out on BHS.
Right now he is more interested in putting some of Brait’s money into up-and-coming sectors like renewable energy than he is in many of the retail deals that pass across his desk.
But Wiese says it might be some time before Brait makes another investment because he wants to expand his existing retail portfolio: “We have very substantial businesses that need to grow and need the support of shareholders.”
“These are pretty solid businesses that will go well in their domestic market but would also serve as businesses for further international expansion.”
He sees potential in eastern Europe, Asia and Africa. Iceland has three directly operated stores in the Czech Republic which opened in 2012. Wiese knows eastern Europe reasonably well – having seen strong growth from his Pepco chain in Poland and beyond.
One of the attractions of New Look was that its chief executive, Anders Kristiansen, has a background of building retail businesses in China and has already opened more than 30 New Look stores there.
Wiese says it is “entirely possible” that some of his new UK brands could eventually head to African countries. Virgin Active already has a strong presence in South Africa and Wiese sees potential in countries such as Namibia and Mozambique. Accordingly, he knocks down the idea that he is investing in Europe because there aren’t enough opportunities in his home market. “It’s not one or the other,” he says.
But Wiese admits that expansion in Africa is not easy – as Walmart has found. “In most of these countries, although things are changing very rapidly, there is a lack of infrastructure. Shoprite is a pioneer of modern retail business in Africa but after 21 years our non-South African business is less than 18% of Shoprite. The lesson is, it takes time,” he says.
Perhaps Britain’s best shot at a global retailer recently has been Tesco, but the supermarket has pulled out of Japan and the US, reduced its presence in China to a stake in a joint venture and looks set to sell up in South Korea. It would be easy to conclude that any attempt at building a world retailer is a bad idea.
Wiese’s take is this: “Money is always the least of the problems. It is finding the right business or growing the right business. You can’t do that without the right people.”
He says now that Brown & Jackson was always a “terrible business” and the main lesson learned from that misadventure was the importance of good management – the business rapidly went downhill when the management team changed.
But Wiese believes he has now backed the right people in the right sector in the UK. He is not concerned that lower-priced retailers might suffer as the UK’s economy recovers and people have more spare cash to spend. “We believe that the bulk of the market will remain at the value end and competition has always been pretty tough. These businesses have been around a long time and seen different cycles. We’re relaxed,” he says.
He may have a view on the future of UK retailing, but will not be drawn into mapping out any strategy. “I believe businesses don’t grow or develop in terms of a blue print. There is a huge element of opportunism involved. We’ll see how life develops,” he says.
One thing is for sure. Wiese will not be giving up on a lifetime of dealmaking any time soon. “You have to keep paddling the canoe,” he says.