How it all began for Pep mogul Christo Wiese
SA’s retail magnate had a humble childhood in Upington, but even then he was good at spotting opportunities
“In some ways, I’m quite lucky to have lost only R59bn. If this thing had happened just one year later, I would have lost everything.”
These are the words of Christo Wiese, the man who describes himself as a “failed lawyer”, but who has been described by others as SA’s answer to Walmart founder Sam Walton or celebrity investor Warren Buffett, or even as the real-life counterpart of JR Ewing, the scheming oil baron in the soapie Dallas.
Since the early 1980s, Wiese has been the ace dealmaker of corporate SA, wresting control of some of the finest brands. By 2015, his portfolio included cash retailer Pep, Africa’s largest supermarket chain, Shoprite, and gym chain Virgin Active as well as a trolley of London high-street retailers.
That brain-numbing R59bn he lost in Steinhoff was about half his fortune. It’s more money than all but a handful of people on the globe stand any prospect of ever amassing, let alone seeing vanish. And yet, it could have been worse.
Steinhoff’s dénouement happened at the eleventh hour of an endgame that Wiese had been planning for four years. The way it was meant to end was that Steinhoff would have controlled the STAR African retail business, which would have been made up of Pep, the JD Group and, the biggest prize of all, Shoprite.
These are the cream of African retailing, clocking up more than R200bn in sales every year. Combined, they would have formed the most powerful conglomerate ever to operate on the continent. And the man destined to pull the strings at the apex of this vast retail empire would have been Wiese.
By December 2017, this plan was about 90% complete.
“It was almost done — all of it,” says Wiese, speaking in his office in the industrial grey of Parow, in Cape Town. Wiese is still sprightly, sharp enough to anticipate the end point of any line of questioning, and relaxed enough to lapse into an amusing anecdote about a friend on a whim. He’s 77 years old, but about 10 of those years have been added since December 2017.
“Steinhoff controlled Pep, it controlled the other retail businesses and Shoprite was already halfway into the structure too. The Public Investment Corporation and I had agreed to put all our shares in Shoprite into STAR, and in return I would have got shares in Steinhoff.”
Had that actually happened, Wiese’s fortune, which had stacked up into a considerable heap after his five decades in business, would have all but vanished. Had he got shares in Steinhoff for his stake in Shoprite, he would have lost the jewel in his crown. Had Jooste not been exposed when he was, but rather a few months later, Wiese would, effectively, have been done. It’s a poignant illustration of how the fate of such immense fortunes can hang by an exquisitely delicate thread, the finest margin separating safety and utter devastation.
To understand how this happened, and what Wiese nearly lost, it helps to start right at the beginning.
Wiese’s ascendancy begins in the small town of Upington on September 10 1941.
While Wiese remembers his early years in Upington as privileged, living as he did in a good home with a good car, the town never lost its flavour as a semidesert frontier settlement. He grew up with the rhythm of nature in his ears.
You can see echoes of that sensibility in Wiese’s character today. He still owns a private game reserve in the Kalahari, still goes hunting as he did when he was young, and his choice of business ventures — such as diamond mining — evokes that rustic start.
When he was young, his father Stoffel ran a Kalahari sheep and cattle farm and a garage; his mother managed a florist and a bridal shop. Their example bred an early instinct for retail.
Initially, Wiese went to school in Upington, but for the final two years he went to boarding school at Paarl Boys’ High. After school, he went on to study law, attracted by the theatrics of it, by the romantic notion that a logical argument could carry the day.
Surprisingly, his first few years at university were not at Stellenbosch, the de facto choice for promising Afrikaner students in those days. Wiese says this was because his father was a “Bloedsap”, an Afrikaner loyal to the United Party of Jan Smuts, and despised the prevailing ethos of the National Party, which had beaten the more centrist United Party in 1948 and immediately introduced apartheid.
However, Wiese says his “less than illustrious academic record” led to his return to Upington with “the firm conviction that I was not cut out for academics — I wanted to be a businessman”. So Stoffel tried to help him. He bought a radiator repair business, which he let Wiese have a bash at running. But it proved too hot a prospect.
“Radiators were repaired with carbide, which is a very hot thing. And my dad bought this little building in Upington which, I swear to you, was the only building in Upington where the sun was shining 24 hours per day. That made me think that studying was not such a bad idea,” he told business journalist Bruce Whitfield.
So he had another crack at law — this time at Stellenbosch, where he did finally get his degree. But it seems Stoffel’s initial insistence that his son study at the University of Cape Town paid ideological dividends, for Wiese was one of only a few students who campaigned against apartheid on the Stellenbosch campus in the mid-1960s.
The fate of immense fortunes can hanf by an exquisitely delicate thread, the finest margin separating safety and utter devastation.
And, then, a moment of serendipity. But for a chance discussion on one of his student vacations back home from Stellenbosch, his life might have gone in another direction entirely. Across the road from his father’s garage in Upington was another garage, owned by a friend.
One morning, Wiese walked over to chat to him, and they soon got talking about someone who’d been married to Wiese’s cousin Alice for a few years by then — a man named Renier van Rooyen. Renier is going places, Wiese’s friend said. He’s got five clothing stores right now, but he’s looking for investors. He wants to go national.
That night, Wiese brought the subject up with his father. Perhaps we should consider putting some money into Renier’s venture, he said. The old man took the bait. He sold his other businesses, and put all of his money into this new clothing company. Renier also struck a deal with Stoffel: that once Christo finished university with a law degree, he must come join the new company. If it was still around, that was.
In 1955 Van Rooyen opened The Bargain Shop. It was nothing more than an unpretentious house with whitewashed walls, jimmied into a shopfront. There was no fancy signage. What there was, however, was plenty of demand for the clothes he was selling, at prices far lower than in the more conventional shops in town.
Soon, Van Rooyen opened BG Bazaars (legend has it the initials BG probably stood for bakgat — a shorthand description of something excellent) and that soared too. In 1965, Van Rooyen got together a small group of investors to take his stores countrywide.
Mostly, the people who backed him were family and friends, including his sister Baba, his brother Gert and Stoffel Wiese. The name chosen for the new venture was picked from a shortlist of 10–including Van’s, Up’s, Ric’s, Ren’s, NW and Pep.
Van Rooyen settled on the last option. The name Pep, his son would record, instantly captivated him: “although it did not really have an intrinsic meaning it corresponded with his own boundless energy and enthusiasm”.
The first Pep store was converted from a BG Bazaars Store, and opened in De Aar — another remote town in the Northern Cape. In December 1965, two new Pep branches opened, in Postmasburg and Kimberley.
In 1966, Pep realised it couldn’t choreograph this new venture from Upington. So Renier, Alice, their three kids and the family German shepherd climbed into the family car, and hit the long dirt road to Cape Town. They settled in Bellville.
Pep opened up a warehouse in Woodstock, before shifting to Kuilsrivier soon afterwards. Pictures from those years show Van Rooyen, earnest eyes sparkling with intent, standing alongside a slim and dark-haired Wiese, often impeccably dressed in a shiny suit.
Wiese slotted easily into Pep’s motley crew from Upington, which included a deep-sea diver, a train driver, a teacher and a carpenter. As second-in-charge to Van Rooyen during the early years, the young Wiese was tasked with identifying new properties for Pep’s expansion.
This was no small responsibility. By February 1968, Pep had 18 stores, and was making R1.6m in sales; by 1969, it had 58 stores and was clocking up sales of R2.9m. Not even a fire, which destroyed more than R1m (about R100m in today’s terms) in stock at the Kuilsrivier warehouse in 1971, could hold the firm back.
As luck would have it, that fire happened just three days after a promising accountant had started at Pep as its financial director — a fresh-off-the boat 25-year-old Whitey Basson.
Recalling that event today, Basson says: “It was about 6pm, and I was sitting in the office with Tom Ball when we noticed smoke coming through the roof.” They rushed down to the warehouse, where they saw flames burning their way through the stock.
The next morning, not having slept a wink, Basson got in his car and travelled to nearby Bellville, scouting out alternative premises. By midday, he’d signed a lease on a new warehouse, and by 3pm deliveries for Pep were already streaming into the new warehouse.
This story encapsulates why Van Rooyen rated Basson so highly. During the mid-1970s, Basson effectively ran Pep. He had Van Rooyen’s power of attorney, and nothing happened at the company without Basson’s say-so. “Renier had worked himself into the ground by that stage,” says Basson.
Basson had been close to Wiese at Stellenbosch University. Their political inclinations were similar, in part because Basson was also part of a Bloedsap family. Basson had studied accounting, did his articles at Ernst & Young, and then began working at PwC, where he audited Pep’s accounts. Basson describes Van Rooyen as the “finest retailer I’ve ever worked with”.
Van Rooyen was a stickler for methodical planning. He’d make extensive notes for his staff all the time.
There are notes to staff in the early 1970s which record instructions such as: “Customers are always right. Never make use of derogatory [racial] comments”. Untypically for the era, he insisted that black and white customers use the same dressing rooms, despite what his son describes as “considerable opposition”.
Then, in 1972, Pep listed on the Johannesburg Stock Exchange at R2.75 a share. In those days, brokers traded on the floor of the JSE, and the demand for Pep shares led to chaotic scenes, according to Die Transvaler newspaper. Pep’s shares ended the day at R3.30.
The brochure that accompanied the listing spelled out Pep’s philosophy in a line: “We do not sell cheap goods — we sell goods cheaply.” As Van Rooyen put it: “We don’t sell rubbish: at a given price our wares are of a good quality, a fact realised by our customers. Poor people are not stupid — they cannot afford to be.”
In its first year as a public listed company, its before-tax profit doubled to R1.6m, on sales of R34m. The number of stores grew from 163 to 222. Then Wiese decided he wanted to give the law profession a bash. So, a year after the listing, he left Pep.
For one thing, it was because he figured Pep had “lost part of its magic as a family business” after it became a public company. For another, it was because he’d just got married to Caro Basson, and wanted the more predictable hours he’d get by practising at the Cape Bar — arriving home before sundown every day, rather than just a few days a month.
There was another reason, though. “Renier was the number one guy,” he says. “I would not have had it any other way — he was a better number one than I would have been. But I also knew that I wasn’t really cut out to be a number two man.”
This is an edited version of a chapter in Steinheist.