At 78, can Christo Wiese start again?
From his being South Africa’s wealthiest man only four years ago, the FM estimates that the value of Christo Wiese’s investments in JSE-listed companies has fallen by 93% — a scarcely conceivable R125bn having gone up in smoke.
His stake in investment firm Brait, which owns Virgin Active, has fallen from R23.2bn to just over R1bn, as the company’s share price plunged 97%; the value of his shares in industrial firm Invicta has fallen more than 80% to R397m; and his holding in property company Tradehold is now nearly a third of the R2.93bn it was in 2016.
Even Wiese’s blue-chip investment in Shoprite has fallen by nearly two-thirds, to R6.3bn.
The retailer’s share price halved over the period, as South Africa’s economy stalled and growth in lucrative markets such as Nigeria plummeted, but he also had to sell part of his stake to plug holes elsewhere.
But the main reason, of course, is the loss of low-cost clothing titan Pepkor, which left a multibillion-rand hole in Wiese’s personal balance sheet.
In 2014 Wiese swapped his stake in Pepkor for shares in Steinhoff — a deal strung together by Markus Jooste, then Steinhoff’s CEO.
By late 2017, Wiese owned nearly 20% of Steinhoff.
Then, on December 5 2017, Steinhoff announced it had found “accounting irregularities” and the world changed — not least for Wiese, who had been chair of the company for only 16 months.
It sparked a cascade of wealth destruction, as Steinhoff’s share price crashed 99%.
The value of Wiese’s stake, worth R86bn just four years ago, is now worth a paltry R176m.
He ended up owning only a sliver of a much-diminished Steinhoff and having no control over what happens to Pepkor.
It was traumatic. I often wake up in the middle of the night and think that this could not have happened
“It was traumatic. I often wake up in the middle of the night and think that this could not have happened,” he says of Steinhoff’s implosion.
Though not at the top of SA’s rich lists any more, Wiese is still a billionaire in rand terms — and he still has his Lourensford wine estate, his luxurious “bungalow” in Clifton and a farm in the Kalahari.
Since early that fateful December, Wiese has not heard a peep from Jooste.
The former CEO was, of course, implicated by PwC’s forensic investigation as the mastermind of SA’s largest corporate fraud and instrumental in the creation of R106bn in fictitious deals over more than a decade.
This week, Wiese finally got some good news.
Steinhoff floated a proposal to settle the 90-odd lawsuits it faces in SA, Germany and the Netherlands, where it was sued for a combined R136bn for what the retailer calls “legacy accounting issues”.
Wiese was the largest of the litigants, claiming R59bn.
His argument was that he’d been duped into swapping his Pepkor stores for a company that was covering up a fraud.
Steinhoff is proposing settling the R136bn for about R16.5bn in a combination of cash and Pepkor shares.
For Wiese, accepting the offer (which seems likely) means he might have to be happy with less than R9bn of the R59bn he claimed.
Still, Steinhoff coming to the table is a step in the right direction, he said.
But even if Wiese accepts, he will own only a fraction of what he used to of Pepkor, before he sold the retailer to Steinhoff.
And he will have no access to his former company’s European business, Pepco.
Steinhoff’s proposal is also dependent on creditor and regulatory approval.
Wiese still holds a little more than 10% of Shoprite, which he built with university mate Whitey Basson.
He is now talking about stepping down from some of the board seats he occupies.
“I will probably serve on the board for another year, two, three,” he says of Shoprite, where he has been chair since the 1980s.
Shoprite is now by far the largest part of the veteran investor’s portfolio.
And he still carries about 38% of Shoprite’s votes.
He is quite bullish about Invicta, after the disposal of some operating divisions in its Capital Equipment Group unit.
“I am starting again to build the smaller businesses, to get them to grow into bigger companies.”
He doesn’t know if he will have enough time to see anything grow into a blue chip again.
“But with the help I’ve currently got, I am certainly going to try.” — Financial Mail
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