Christo Wiese, who was once South Africa’s richest man, has swapped his office in an industrial area of Cape Town for a view of the Atlantic Ocean.
The corporate fraud at Steinhoff International Holdings that cost the 78-year-old much of his fortune coupled with the coronavirus outbreak, has convinced him to break the habit of half of a century and ease toward retirement.
“No doubt the change that was going to come anyway will be hastened by this Covid experience and also hastened by the Steinhoff nightmare,” he said in an interview. “The way I operate will certainly change.”
Wiese, the biggest individual shareholder in Shoprite Holdings, Brait and Invicta Holdings, earlier this year quit taking the 40 minute drive in his Lexus Landcruiser from his house in Clifton, the beach-front strip in Cape Town that’s among Africa’s most expensive suburbs, to minimise the risk of catching the coronavirus. Over the preceding decades, he had built Africa’s largest clothing chain, Pepkor Holdings, and Africa’s biggest grocer, Shoprite.
Wiese, the son of a farmer and gas station owner, joined Pepkor in 1967, two years after it started with a single store in Upington, a town in South Africa’s arid Northern Cape province.
The pandemic accelerated a shift for Wiese that started two years ago, when Steinhoff’s accounting scandal almost wiped out the global retailer. In 2014, Wiese exchanged Pepkor for stock worth $5.7 billion in Steinhoff, becoming its biggest shareholder and chairman. Within weeks of the news of the financial irregularities that slashed Steinhoff’s share price by about 90%, he’d stepped down from the board and creditors had forced the sale of part of his stake. He has sued for R59 billion.
Its been a tough four years for Wiese, now valued at just $255 million according to Bloomberg calculations.
The Steinhoff blow came a year after Brait, the investment company in which he’s the largest shareholder, had plowed 1.6 billion pounds ($2 billion) into the UK on the threshold of its vote to quit the European Union. In less than six months, Brait’s shares plunged 44%.
Brait started a salvage process in November, announcing a sweeping overhaul that aims to sell assets over the next three to five years. The spread of the coronavirus has slowed those plans with the sale of its Virgin Active fitness chain delayed by as much as 18 months following the closure of gyms.
“In terms of the rejuvenation of Brait, this could not have come at a worse time,” Wiese said.
The Steinhoff misery is also far from over. While Steinhoff is said to be close to reaching a potential deal on 10 billion euros ($11.6 billion) of legal claims lodged against it, a large part of Wiese’s suit is being challenged by a group of financial institutions, including Goldman Sachs Group, Citigroup, Nomura Holdings and HSBC Holdings.
That’s after Wiese secured a 1.6 billion euro margin loan from them in 2016 to participate in a Steinhoff equity raise to help pay for its acquisition of Mattress Firm and Poundland. Steinhoff shares were pledged as collateral.
He takes solace in his more successful ventures – the most prominent of which is a 10.2% stake in Shoprite. Before the coronavirus lockdown that began March 27 Shoprite had been taking a greater share of South Africa’s grocery market.
Wiese also adds the retailer’s social welfare efforts to his philanthropic resume. As the virus spread, Shoprite tripled its fleet of trucks delivering free meals o poor areas of Johannesburg and Cape Town to 27.
His smaller venture, Invicta, has started producing ventilators, oxygen helmets and a range of sanitisers and disinfectants. These will be sold across Africa from August and Wiese specifically sees this deal as a triumph for local manufacturing.
Still, his biggest joys are his afternoon visits from his grandchildren, who often storm in demanding chocolate, and the pleasure he gets from owning the 4 000-hectare Lourensford Wine Estate.
With South Africa having banned the sale of liquor as part of its measures against the coronavirus, “many wine farms are struggling,” he said. But, “at least in terms of personal supply,” owning Lourensford helps.
© 2020 Bloomberg