Christo Wiese's Brait Ups Iceland Stake in $261 Million Deal

  • South African billionaire buys out Graham Kirkham, Landmark
  • Purchase increases Brait's exposure to U.K. retail market

Brait SE, the investment company controlled by South African billionaire Christo Wiese, paid 172 million pounds ($261 million) to raise its stake in budget supermarket chain Iceland Foods to 57 percent, increasing its exposure to the U.K. high street.

The shares were bought from Graham Kirkham, the billionaire founder of U.K. sofa chain DFS Furniture, and the Dubai retailer Landmark Group, Brait said in a statement on Friday. The purchase, which increased the San Gwann, Malta-based company’s stake from 19 percent, was funded by the sale of 350 million pounds of convertible bonds last month.

The deal “is in line with Brait’s strategy of acquiring majority stakes in sizeable unlisted companies,” the company said. Iceland “is well positioned with its value-end proposition for the current and medium-term economic climate prevailing in the U.K.”

British shoppers have been increasingly turning to discount retailers including Aldi and Lidl, and all four of the U.K.’s largest supermarkets have put lower prices at the heart of their efforts to retain customers. Almost 10 pence in every pound spent in U.K. supermarkets now goes through the tills of Lidl and fellow German chain Aldi as the retailers overcome stereotypes of dimly lit outlets where only poor people shop.

U.K. Exposure

Brait is investing outside its traditional market of South Africa after raising 26.4 billion rand ($1.94 billion) from the sale of African retailer Pepkor Holding Pty Ltd. last year. The company agreed to buy majority stakes in British health-club provider Virgin Active and U.K. women’s clothing retailer New Look this year for a combined 1.5 billion pounds.

Brait shares declined 1.5 percent to 140.08 rand as of 4:43 p.m. in Johannesburg, valuing the company at 73 billion rand. The stock has gained 79 percent this year, the best performer on the FTSE/JSE Africa Top 40 Index.

Wiese, South Africa’s richest man with a net worth of $7 billion, according to the Bloomberg Billionaires Index, first invested in Iceland three years ago alongside Kirkham and Landmark as part of a purchase from the chain’s Icelandic owners. Founder and Chief Executive Officer Malcolm Walker and management will continue to hold 43 percent of the retailer. Brait also co-owns Virgin Active and New Look with management.

Brait also raised 16 billion rand from the sale of its 5.14 percent stake in Steinhoff Holdings Ltd., gained as part of the sale of Pepkor to the South African furniture retailer last year. The company will use the proceeds to pay 14.2 billion rand of debt. Johannesburg-based Steinhoff said in a separate statement it bought 150 million of the 200 million shares and would hold them as treasury stock.

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