The life of Brian

Joffe con­tem­plat­ing the fu­ture

Finweek English Edition - - Business Strategy - BRUCE WHIT­FIELD brucew@fin­

HAS BRIAN JOFFE MEL­LOWED? To the ca­sual ob­server it might ap­pear so. How­ever, any num­ber of his col­leagues will dis­pute that no­tion. De­spite that, some­thing cer­tainly seems to have changed. Says one long-time friend: “I sus­pect the fi­nan­cial cri­sis has taught him that there are cer­tain things be­yond his con­trol and he’s en­joy­ing life.”

Maybe it’s also be­cause Joffe is see­ing ten­ta­tive signs of a turn­around in South Africa’s econ­omy. The Bid­vest Group said at its re­cent in­vestor day that con­di­tions in its main mar­kets ap­peared to be im­prov­ing, with in­ter­est rates and inflation turn­ing pos­i­tive. Should those con­di­tions con­tinue to ma­te­ri­alise, then Bid­vest, dom­i­nant in ser­vices in SA and a grow­ing food sup­plier in Europe and Aus­trala­sia, could be well po­si­tioned to ben­e­fit from a re­cov­ery.

At 62, Joffe may be more ac­cept­ing of the mul­ti­tude of ex­tra­ne­ous is­sues over which he has no con­trol than he might have been 10 years ago – but that doesn’t mean he’s wind­ing down. At heart he’s a deal­maker and has grown Bid­vest piece by piece over two decades into a multi-dis­ci­plinary ser­vices, lo­gis­tics and trad­ing op­er­a­tion.

Un­bundling isn’t on the agenda, but the na­ture of Bid­vest’s eight di­vi­sions means any one of them could be spun off without too much drama at any given time. But that’s not cur­rently un­der dis­cus­sion.

For many, the terms “Bid­vest” and “Brian Joffe” are in­ter­change­able. Some crit­ics ar­gue it makes the com­pany vul­ner­a­ble and brings into ques­tion the depth of man­age­ment. Joffe chooses to play down the sig­nif­i­cance of his own con­tri­bu­tion and finds the mys­tique about his name in­creas­ingly weari­some.

“There was a time when the Joffe name might have com­manded a pre­mium – but that’s gone now,” he says, point­ing to the fact that not all deals he’s done have turned to gold – high­light­ing Tiger Wheels as one case where Bid­vest lost money, and Nam­pak, where his ad­vances last year were re­buffed.

But Joffe knows he can’t run the busi­ness in per­pe­tu­ity and is scouting for a suc­ces­sor. It’s not a sim­ple process. Bid­vest is a vast con­glom­er­ate of busi­nesses man­aged by eight CEOs, each of whom is given con­sid­er­able lee­way to run his own op­er­a­tion.

“I don’t re­ally know who will take over; it would be very dif­fi­cult to find and em­ploy an out­sider. There are some peo­ple in­side who could do it,” says Joffe, who closely mon­i­tors the minu­tiae of divi­sional per­for­mance on a daily ba­sis, looking for ar­eas that need at­ten­tion and con­stantly as­sess­ing who is best suited to in­herit his legacy. He clearly has a cou­ple of names he is watch­ing closely and his suc­ces­sor is likely to be one of his cur­rent divi­sional heads.

Bid­vest’s roots lie in the ac­qui­si­tion of the food ser­vices busi­ness Chip­kins when he utilised some of the R6m he’d earned from sell­ing (the now in­fa­mous) W&A to Jeff Liebesmann in the early Eight­ies. It could all have been very dif­fer­ent. When Joffe started as Bid­corp, the com­pany had a cash value of 280c/share, which rock­eted in days to 420c. Joffe briefly con­sid­ered cash­ing in and mak­ing a tidy profit. To­day, 100 000 em­ploy­ees are prob­a­bly grate­ful he went for the longterm gain as op­posed to prof­i­teer­ing quickly and over the short term.

“We want to earn a re­turn on as­sets man­aged,” says Joffe. The global cri­sis presents Joffe with mul­ti­ple op­por­tu­ni­ties, but he’s not com­mit­ting him­self to sec­tors or ge­ogra­phies.

One burn­ing is­sue as Gov­ern­ment con­tin­ues to throw good money af­ter bad into the na­tional car­rier is whether Bid­vest is in­ter­ested in own­ing SA Air­ways. “Some­body will buy it one day. There’s an op­por­tu­nity there,” says Joffe, but de­clin­ing to be drawn on the specifics of his think­ing about SA’s air­line in­dus­try.

Bid­vest al­ready owns 25% of in­de­pen­dent op­er­a­tor Co­mair. It also runs a large num­ber of air­port sup­port ser­vices, from clean­ing, passenger ground trans­port, bag­gage han­dling and other land func­tions for air­lines. Tak­ing a di­rect stake in SAA would raise some chal­leng­ing ques­tions about pos­si­ble con­flicts of in­ter­est but might fit quite neatly within the broad frame­work of the Bid­vest busi­ness phi­los­o­phy, which counts ser­vices, dis­tri­bu­tion and trad­ing busi­nesses as its core com­pe­ten­cies.

Bid­vest’s next big deal is likely to be out­side SA. The United States is one coun­try Bid­vest is yet to breach. How­ever, it has solid, grow­ing di­vi­sions in the Asia Pa­cific re­gion and in Europe: both could be bol­stered with less risk than a US ven­ture, where mar­kets are no­to­ri­ous for chew­ing up and spit­ting out South African en­trants.

Joffe has very lit­tle di­rect op­er­a­tional in­flu­ence over the busi­nesses un­der his watch. In that lies its strength, as it en­ables man­age­ment teams to work to­wards their own in­cen­tives and to man­age the busi­nesses most ap­pro­pri­ately for the sec­tors in which they op­er­ate.

“They don’t see me as the boss. But when I phone, they know the boss has phoned,” he smiles wryly. He clearly hasn’t soft­ened com­pletely.

At heart he’s a deal­maker. Brian Joffe

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