Every week seems to bring a new South African bid, with two in the past month and more to come.
Over the weekend there were stories that Foschini, one of the more upmarket South African retailers, is about to launch a bid for Whistles, a favourite of the UK’s duchess of Cambridge. Whistles has 49 stores and lots of franchises in big UK outlets such as Harrods.
The Cape Town-based Foschini, with 2,000 stores across South Africa, already owns Phase Eight, the London-based women’s fashion chain, which it bought last year for more than £300 million.
Its ambitions don’t stop there. It is also said to be interested in another fashion chain, Office, and goodness knows what after that, on its acquisitions trail. The British high street is a nervous place these days, standing by to repel incomers.
Leading the South African vanguard is the remarkable Afrikaans-speaking businessman Christo Wiese, whose roots remain firmly in his homeland but whose ambitions stretch much farther than the Orange Free State, where he was born 74 years ago.
Retailing is not a great Afrikaner tradition and there were not many fashion shops where Mr Wiese grew up before qualifying as a lawyer in Stellenbosch. Yet in the past 40 years he has built his Shoprite supermarket chain into the biggest food retailer on the continent of Africa, before moving on farther north. Last year, through his investment vehicle Brait, Mr Wiese bought control of the New Look UK retail chain in a £1.9 billion deal, adding to his £628m acquisition in April of a near 80 per cent stake in the fitness group Virgin Active.
Through Pep & Co, a discount family fashion chain that is led by Andy Bond, the former chief executive of Asda, he has been expanding into other areas of the high street. And he bought a stake in the food retailer Iceland, which he has been steadily adding to.
That, however, is just the warm-up. The Johannesburg-based Steinhoff International, in which Mr Wiese is the largest shareholder, last month proposed an all-cash offer of £1.3bn for the Home Retail group – the owner of the Argos catalogue retailer, which J Sainsbury had built a whole new strategy around acquiring. In a single move, Mr Wiese spoiled the little party.
Before the City analysts could even get their minds around that one, last Wednesday it confirmed it had approached the UK white goods retailer Darty with a £650m all-cash offer.
The Steinhoff vehicle in this case is the French-based Conforama, one of Europe’s biggest home furnishings dealers, which already has large interests across France.
Even before the bids, Steinhoff, into which Mr Wiese injected one of his holding companies in a $5.6bn deal last year, is already a hefty company, employing about 90,000 people worldwide. Known to some in the furniture industry as Africa’s Ikea, it has bought manufacturers and retail outlets including Conforama in France and Harvey’s in the UK, and is now the second-largest furniture retailer in the world.
Although, like Mr Wiese, South African retailers deny their plan for overseas expansion has anything to do with the political situation in their home country, in reality it does.
The South African economy is dead in the water, teetering on the edge of recession, and retail sales are going nowhere. The top end of the market, where Foschini operates, is in decline and even at the bottom end it is struggling.
In the past three months, the value of the rand has fallen by more than 20 per cent and has halved against the dollar in the past three years, providing a powerful incentive to diversify abroad.
Those who can, such as Mr Wiese, do. The Cape Town-based Woolworths, South Africa’s equivalent of Marks & Spencer, acquired David Jones, the Australian department store, in 2014 in a deal valued at US$1.52bn, and Johannesburg-based Massmart, which is majority-owned by Walmart, has also been expanding across Africa.
The landlocked companies, such as Pick n Pay, which remain behind, are struggling.
Mr Wiese hates the idea of being seen as deserting his homeland, insisting his overseas push has nothing to do with losing faith in South Africa.
“It’s not a matter of moving assets out of South Africa – it has rather a positive pull,” he says. “I’m well known as a great South African and African optimist, I believe, with good reason.”
All of that is true. Unfortunately it gains him no brownie points with a Zuma government which is increasingly seen as anti-business and anti what it calls “colonialism”, which essentially means white-controlled business in particular. At present the movement of capital and of business is out, not in, and that is unlikely to change in a hurry. Expect more British high street names to tumble.
Ivan Fallon is a former business editor of The Sunday Times.
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Jeff Buckley: From Hallelujah To The Last Goodbye
By Dave Lory with Jim Irvin
KEY DEVELOPMENTS IN MARITIME DISPUTE
2000: Israel withdraws from Lebanon after nearly 30 years without an officially demarcated border. The UN establishes the Blue Line to act as the frontier.
2007: Lebanon and Cyprus define their respective exclusive economic zones to facilitate oil and gas exploration. Israel uses this to define its EEZ with Cyprus
2011: Lebanon disputes Israeli-proposed line and submits documents to UN showing different EEZ. Cyprus offers to mediate without much progress.
2018: Lebanon signs first offshore oil and gas licencing deal with consortium of France’s Total, Italy’s Eni and Russia’s Novatek.
2018-2019: US seeks to mediate between Israel and Lebanon to prevent clashes over oil and gas resources.
BORDERLANDS
Starring: Cate Blanchett, Kevin Hart, Jamie Lee Curtis
Director: Eli Roth
Rating: 0/5
Company profile
Name: Oulo.com
Founder: Kamal Nazha
Based: Dubai
Founded: 2020
Number of employees: 5
Sector: Technology
Funding: $450,000
Company%20Profile
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Pearls on a Branch: Oral Tales
Najlaa Khoury, Archipelago Books
Israel Palestine on Swedish TV 1958-1989
Director: Goran Hugo Olsson
Rating: 5/5
COMPANY%20PROFILE
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What is a Ponzi scheme?
A fraudulent investment operation where the scammer provides fake reports and generates returns for old investors through money paid by new investors, rather than through ligitimate business activities.
Company profile
Company name: Nestrom
Started: 2017
Co-founders: Yousef Wadi, Kanaan Manasrah and Shadi Shalabi
Based: Jordan
Sector: Technology
Initial investment: Close to $100,000
Investors: Propeller, 500 Startups, Wamda Capital, Agrimatico, Techstars and some angel investors
THE BIO:
Favourite holiday destination: Thailand. I go every year and I’m obsessed with the fitness camps there.
Favourite book: Born to Run by Christopher McDougall. It’s an amazing story about barefoot running.
Favourite film: A League of their Own. I used to love watching it in my granny’s house when I was seven.
Personal motto: Believe it and you can achieve it.
Company%20Profile
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The specs: 2018 Renault Koleos
Price, base: From Dh77,900
Engine: 2.5L, in-line four-cylinder
Transmission: Continuously variable transmission
Power: 170hp @ 6,000rpm
Torque: 233Nm @ 4,000rpm
Fuel economy, combined: 8.3L / 100km
Biography
Favourite Meal: Chicken Caesar salad
Hobbies: Travelling, going to the gym
Inspiration: Father, who was a captain in the UAE army
Favourite read: Rich Dad Poor Dad by Robert Kiyosaki and Sharon Lechter
Favourite film: The Founder, about the establishment of McDonald's
Will the pound fall to parity with the dollar?
The idea of pound parity now seems less far-fetched as the risk grows that Britain may split away from the European Union without a deal.
Rupert Harrison, a fund manager at BlackRock, sees the risk of it falling to trade level with the dollar on a no-deal Brexit. The view echoes Morgan Stanley’s recent forecast that the currency can plunge toward $1 (Dh3.67) on such an outcome. That isn’t the majority view yet – a Bloomberg survey this month estimated the pound will slide to $1.10 should the UK exit the bloc without an agreement.
New Prime Minister Boris Johnson has repeatedly said that Britain will leave the EU on the October 31 deadline with or without an agreement, fuelling concern the nation is headed for a disorderly departure and fanning pessimism toward the pound. Sterling has fallen more than 7 per cent in the past three months, the worst performance among major developed-market currencies.
“The pound is at a much lower level now but I still think a no-deal exit would lead to significant volatility and we could be testing parity on a really bad outcome,” said Mr Harrison, who manages more than $10 billion in assets at BlackRock. “We will see this game of chicken continue through August and that’s likely negative for sterling,” he said about the deadlocked Brexit talks.
The pound fell 0.8 per cent to $1.2033 on Friday, its weakest closing level since the 1980s, after a report on the second quarter showed the UK economy shrank for the first time in six years. The data means it is likely the Bank of England will cut interest rates, according to Mizuho Bank.
The BOE said in November that the currency could fall even below $1 in an analysis on possible worst-case Brexit scenarios. Options-based calculations showed around a 6.4 per cent chance of pound-dollar parity in the next one year, markedly higher than 0.2 per cent in early March when prospects of a no-deal outcome were seemingly off the table.
Bloomberg