How Shoprite Chairman Christo Wiese made his billions

a place called para industria if you drive along the into and then turn left it's about 20 minutes from Cape Town it I suppose it can be described as an unfashionable suburb and yet here I am in the office of the world's three hundred and sixty seventh richest man and the richest man in South Africa apparently apparently this gentleman is worth around seven billion US dollars that's according to Forbes magazine whether that's true I don't know but anyway you get the picture this gentleman could be in a penthouse office in the center of Cape Town looking over all the beautiful beaches of camps bay and Table Mountain and even see to the Winelands where he owns a wine estate called loans for Billy chooses not to Crysta visa why do you stay in power industrial well you know I believe that if one is involved in business you've got to kind operate within an area with is an atmosphere of business I have at times thought that I would like to have my personal offices on the estate for instance in Loudoun psmith but a friend of mine pointed out that then when I get to the office in the morning I'll worry about whether the loan had been cut properly or whether the flowers in the bed outside my office are okay you've got to be in a business environment that's one aspect the other is you know purely an excellent of easly we bought a company that owned this huge building in peril I made my office yet and it just stayed that way isn't is it also to do with the fact I mean there's another family not far from here that made its money a good chunk of its money anyway from luxury goods and serving the upper end of the market you have served traditionally and served the world the lower two lower middle class end of the market do you feel that this grounds you and makes you closer to the people you actually serve it certainly does have that benefit as well in fact I have a friend who is a very well-known politician who always delights in telling people you know Christo has these offices in a Township because right across the road from without building is he's a Township and you still drive your car here absolutely did it throughout the turbulent years in 1985 1986 when there were lots of street protests burning diets and things people would phoned me from abroad and say but do you still go to your office that I haven't Vettes anything I come here early in the morning drive home late at night that has never affected me what is it about stellenbosch Krista because there are so many people that I interview in my job every couple of weeks someone from stellenbosch has done something extraordinary I mean you know they're right at the top of the business strata who I'm talking about but what is it about stellenbosch is it an Afrikaner stock thing is it a education institution thing is it the wine there must be something around here that it produces these extraordinary entrepreneurs well I think that you know all these elements obviously have some impact on it but I think if you take one step back you see a very interesting picture emerging as far as the South African business seen today is concerned the most prominent people the names you've always read about are 80 plus percent Afrikaans that is a complete reversal from 30 or 40 years ago where they were a few Afrikaans business luminaries but the bulk were English speaking or Jewish today it's African speaking and black now what is the reason for that if you go in my view it is these people of which I suppose I'm one in this new wave is like third-generation Afrikaans business people industrialists you know before the Second World War the African speaking people were mainly on the agricultural side of the economy and these people started coming through they went to good schools put universities at a tight theater there's nothing else there is nothing in the water that's telling boss that makes it different family in business I think it characterized this office because it's a business like office and yet I look around and there are at least 2530 pictures of your lovely family they're the two main things in your life they are certainly I bid with family being number one hmm yeah so you're not a flashy person I'm trying to get to the the roots of what Chris Teresa is and I'll give you an example now let's say there was a deal that you'd been had in your mind for quite a while and it was your deal yeah and people said no don't bother with this deal because you can't achieve it anyway but you went and you've hurdled all the barriers and the deal came off and you made a million round out of it it was just you and there's another deal and these people walk into your office and they put all your cohorts they put it on a piece of paper on your desk and they say just sign here this is a billion dollar a deal it's all done we've done it you saying thank you very much which would you prefer to do the mail that the money or the deal well I mean obviously both are important because I mean presumably the object of the deal is money at the end of the day so they are both important but the thrill of being involved in putting the deal together overcoming the obstacles that you refer to up is an important part of it today the way the businesses have developed I've got colleagues that are a lot smarter than I am that are totally up to speed with all the regulations and all the laws and all the accounting principles that one has to adhere to these days so many times they do the bulk of the work but you know overall when we strategize and we've got to clear the concept I'm very much involved you mentioned money and I want to mention money now because you can't ignore that you are the three hundred and sixty seventh richest man in the world and there's no man or woman in South Africa that is richer than you how does that make you feel first question and secondly why do you keep on doing deals you can't spend that money you've got three children and an extended family of L's and they can't spend that money why more money now but Lindy you know once you go beyond a fairly modest sum of money in in South Africa it becomes marginal being there the old story you can only eat three meals that I sleep in one bed etcetera etcetera so it's not about what the money can buy clearly not plus you know I like to think of myself as a person who is non fleshy I certainly have a wife who has great problems with any ostentatious display of wealth and our children grew up that way and I'm so therefore I'm that way inclined anyway but I suppose at the end of the day it becomes a measure a yardstick of you know whether you've done well or not so well it's not about you know to say well you know I've got so much money but the fact of the matter is most of each people have assets you know which is different from having money I know what you're saying and I won't dwell on that too much apart from saying one thing I did a piece on philanthropy the other day and it was Andrew Carnegie I can't remember exactly what his quote was but it was something to do with the man can't be rich and less see in enriches other and others and people like Warren Buffett for example have pledged to give away 85 percent and so that is one of the great things about having enormous wealth you can still be very wealthy but give it away what is your attitude towards that no I in broad terms agree with that I do have a very strong Calvinist streak I think that you know I one of the driving forces in my life was I wanted my children to have a better life than perhaps I had and I had a good life but you know you want better for your children because your standards increase as your experience and your wealth grow and so I have that Calvinistic so I'm not really going to land in a camp too quickly that proposes giving everything away but when you talk about enriching other people's lives that for me has also been a driver in my business development we employ a the larger group 300,000 people many of those people I started with as a youngster and I saw them develop as people and how their families through their involvement in the business also had a better life that that is a more important way of enriching people's lives I believe than just dishing out money quite right in fact when I ever speak to YTB son of ShopRite see one of your colleagues one of the first things he ever says is this is how many jobs we've created and this is the engagement I've had with government is that your attitude as well absolutely you know you and I spoke earlier on before we started the interview about the negative headlines that you always get when a mine retrench is ten thousand people it's on the front page of every newspaper our group creates more than 12,000 new job opportunities every year you never read about that night Richard we've got to now go through your business and life history you went to pal boys high stellenbosch degrees then you studied law at the Cape Bar you could have taken a safe job I mean you really could have done you could have you could have been a nine to five or an eight to six person but you decided not to why was that well it was livid on the Agena I never saw myself as the kind of person who'd go to the office at 9 o'clock go home at 5:00 and mow the lawn but that that was just not me the second time you mention lawns by the way so frustrating Gardner I am I am but really frustrated one was I know nothing about gardening except that it appeals to me when it's beautiful yes but then I suppose Lindsey the fact is I grew up in a business home in a small town my dad had a business and he was a farmer and eventually my mother had her own business so there was always this kind of sense of being involved in business and then like most things in life I do believe that there is fate you know you things happen at a particular time in your life and you see an opportunity and if your personality is that way inclined you'll and where you ultimately find yourself I have great difficulty with people who suggest that their business development happened in terms of some kind of blueprint that's nonsense nobody has a blueprint business is ultimately opportunistic you're in the arena and opportunity comes by and you try to exploit it and it's also to do with chance meetings it's not randomness of course because you have to be in the right place at the right time to increase your possibility of having that opportunistic business opportunity but that's the way it works yeah and absolutely the way hmm we are going to take a break now and after the break Christo we are going to talk about Christo visas development with pep and pep core and and ShopRite and stein off and in Victor and Breit and all sorts of other things so please stay with us you welcome back home with Chris Teresa in his office in power industrial we've been talking about all sort of esoteric aspects of his business philosophy and one thing that Christo said before the break was that there's no blueprint to business success it's not random either but certainly it's not all planned and it's not all smooth so tell me about pep and your parents please Chris all right now my dad had a garage in Abington and he also had a farm and across the road from East garage was another garage owned by a friend who age-wise was between myself and my dad and he was very friendly with linear Thunder wind who was the founder of PIP and arguably one of South Africa's great entrepreneurs started in a little shop I mean no bigger than five by 10 meters that's where it all started now you saw nothing to get up in them now relief Android was married to a cousin of mine so we knew him and we kind of were aware of his little business but on one particular day I was at home or home in uppington on holiday from university I walked across the road to this friend's garage and he mentioned to me he said you know this renewed father is really beginning to go places this is now were three or four jobs I believe he wants to go national and he's looking for investors and it was cool pep and it was called know that time not yet called pip okay and I listened with interest and that evening I spoke to my dad that's it you know we should speak to the need and find out and to cut a long story short my dad sold his businesses and invested in pip went on the board and the arrangement was that when I graduate from university I would join the business which is what happened now I told the story to a friend one day I said you know how would my life have developed differently if I had not walked across that road on that particular day was it was something we were aware of but we didn't focus on it he made me focus and made my dad focus and we took a decision now at the risk of sounding arrogant or conceited when I told this friend the story he said no Chris are you the type of guy you would have walked across another Street which innocence is true people who are have a certain philosophy certain approach to life they walk across street so you're curious have across opportunity you're a curious person yeah all the time did retail appealed to you at any time before he walked across the street and knew that your father's friend and his rival businessman had a retail operation yeah it's always been in my family you know my father grew up in the really tough years I mean the Depression years and so forth yeah in South Africa he was born in 1906 and went through the drought and the depression and all that sort of stuff but he always had his own little business and it always had an element of retail I mean a garage is just a retail about the dealership mmm just a retail business then after pep you invested in your friend's business which wasn't that then cool pet became cool pet and then what happened after that well I be that went on a very aggressive expansion phase I joined the business full-time in 1967 were you behind the aggressive expansion phase or was it your father no it was driven by the founder by the need fund ruin but with very enthusiastic support from myself it you know my dad was in those days somebody at the age of 60 was considered already you know retirement age so my dad was there in the background giving encouragement and support but really the main driver was was the founder and with as I say very enthusiastic support for myself then we got to fast forward bit now we could do three hours on this story but let's move on to shop right one million round that was a lot of money in those days it was a lot of money yeah a lot of money the actual purchase price was two million land but the company had a million land in the bank so NIT we bought a hundred percent the purchase price NIT was 1 million left did you miss Africa me walk across the street and see shop right how did it work no it didn't at that time when shop light was bought I was practicing law at the Kate bar because I lift for the spell from about 90 73 to 77 1973 74 until 1980 81 was that a black reacting in order for you to have the skills that you might need in your future career no that wasn't the consideration at all the reason I went to the bar is to practice at the bar is by that time in South African terms and in my environment I'd become a wealthy man through the listing of bit on the Jersey my first love I always thought was the law the theatrics and the intellectual stimulation and citator appealed to me plus I was hoping to get married to my wife and she I don't think the marriage would have worked because I was away from home 20 days a year while I was working for Pitt they are traveling the country opening stores signing leases and so forth I mean that's a way to start a marriage so I thought well you know I got enough money I can now you know stay to operate with my friends at the bar enjoy life and marry the girl of my dreams so that was the the driver was not preparing myself for a bigger role in business apart from the man is driven in business and likes retail and walks across streets metaphorically and physically also a romantic and a person that likes theatricals and wants to go into a job the way you dress up and wear wigs and that sort of thing and you speak you know very formally and you are addressed very formally and you have all this intellectual stimulation that aren't you all the time mmm okay shop right now again to go I want to get forward to the the Virgin active and the new-look business with with with rape but to get to shop right now that's a phenomenal story and also okay okay was involved just after shop right yeah well you know shop right when we bought it I think owned six supermarkets renewed fund ruin again add the brilliance to appoint a very young YT person yes to run that now there again comes the opportunistic element comes into it because one of the founders of shop light was a born praedyth chap called Barney Robert Masons passed away and he and whitey person in spite of a vast difference in age and inexperience and in educational qualifications but Barney was the sort of guide left school at the age of fifteen whitey was a fully qualified CA but the two of them got on like a house on fire proverbial and just got this business going and again I must take a little bit of credit with some hesitation when I became chairman in 1981 which is only two years later yes whitey and I were good friends at University and have been very close friends for 50 years I I think offered a very valuable support base for whitey to really get going but ultimately the credit for the exponential growth of shop rag belongs to whitey and his team and Barney Rogan hmm okay the s Abram in SA Bruce has been in the SABMiller has been in the news so much listen can you believe that company one point four trillion what an astonishing story astonish another great sets of F and success story people - si B because they used to own okay and you bought it for one rent that's correct interesting story when I grew up the retail scene in South Africa was dominated by the ok bazaars I mean that was like you know so far number one that nobody else came close and you know the history because of exchange control it ate rats it I mean it's a breweries got into businesses far removed from their core business one of which was ok bazaars when it was run by by a con who subsequently became head of his annuities it was a great business but when he left the business declined and it was losing money now if you run the sums it's quite interesting yes a brewery was trading the share was trading if I remember correctly at a twenty PE ok bazaars was losing two hundred million rand a year times 20 is 4 billion rand of shareholders value yes that up in smoke so by my ik on selling oakley was asked to ask for one Rand and what people always forget part of the deal was they had to be 1 billion reigns worth of net assets so in truth we never paid around we got a billion right for buying the business but was a brilliant decision on their part because they took a 200 million and loss out of the equation the rest is history of course and we want to come to recent history because we're running out of time sadly and brait this is one of these situations where the market got it completely wrong the share price came down enormous ly after that disposal and all that casting around people say we must punish you because you've got all that cash and then suddenly virgin a new look and goodness knows what else in the future that's a great story I mean I can't believe that thing went from 60 or 70 up to 140 150 but I've been Lindsay the true story that when the new blade was established in 2011 why do I say the new brain until 2011 right was a typical private equity fund manager managing other people's funds in private equity deals right John Nora the CEO bright and I got together and we decided that there is a better model an investment holding company model where we invest our own capital we then went on a capital raising exercise which had a rights issue which I under oath which was very successful we now add a lot of capital to invest but our own money or the company's own money that share price in 2011 was 16 Rand 50 and in four years that increase tenfold it was mucking about remember when it was in the teens for ages the future of a brace is obviously linked to a virgin and new look but will this be your vehicle to indulge yourself in things that you might think are a good better no use you seem to like the UK at the moment yeah I think that was again you know by pure chance obviously we are South Africans feel very much at home in the UK it as a legal systems the same we speak the language we use the same sort of telephone system and we drive on the same side of the road yes so we feel very much at a limited in that environment so it's natural for us to look at opportunities there but that wasn't what drove it in this instance bright has a very clear set of criteria by which it decides whether to make an investment or not and those two businesses just happened to tick all the boxes literally tick them all so it was a relatively easy decision one more question and we were it's going to be a very brief answer if you would the comment she made to me before we went on air about negativity or not a negative person you don't understand negative people and you say that the media sometimes projects the negative side and I said well that's because bad news travels fast patent in London speaking about London at London City Airport with a with a load with a load of cash you were found innocent in you were paid interest for what happened there that's very simple you know you must turn the clock back to what the world looked like in those days I mean banks were going bust we had one of our group companies had money in one of the most that I think one of the highest regarded banks in the world UBS one day my man phoned me and he said crystal we've got some money in UBS I'm going to do something today which I would have bet my life I will never do I'm going to withdraw our funds and place it with other banks I mean that was picture that yes number one number two something that I have to say very carefully and that is that the point I made to you earlier always look in context yes you threw out this number of Forks etc yeah although that money by sound to most people like a lot of money in context it's utterly not such a lot of money that's what your legal case was we've got a lawyers I said to them player down man I don't what do you know make this point that it's not really money I have this money always had it in London in a safe deposit box I was moving some of my activities to Luxembourg I'd bank accounts then I was taking the money from London to Luxembourg after taking advice that it is perfectly legal you can move any amount of money in EU countries without answering any question you are perfectly legal you can do that and that's what I was doing I've always wondered I on earth you got it all into one suitcase because sir we've run out of time thanks very much for letting accessibility you

Channel: CNBCAfrica

Views: 77,287

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Keywords: ChristoWiese, Christo Wiese, south Africa, Shoprite, retail, CNBC Africa, richest man

Id: kyQD-bSGJYs

Length: 27min 40sec (1660 seconds)

Published: Mon Oct 19 2015