From dog food to dealmaker
Football fan Brian Joffe has built a $9bn business empire and a tough reputation
AS Brian Joffe discusses his future at the helm of the business empire he has built over three decades, his thoughts turn to Sir Alex Ferguson, the former Manchester United manager.
Joffe, 67, the founder and CEO of Bidvest, one of South Africa’s most successful conglomerates and the country’s second-largest company by revenue, is a football fan.
Bidvest sponsors Sunderland, another English Premier League team, and Joffe is a director of Bidvest Wits, one of the top Absa Premiership teams affiliated to his alma mater, the University of the Witwatersrand.
He notes the travails that have blighted United since Ferguson’s retirement after 26 years in charge and the ensuing accusations by some about the state in which he left the club.
Joffe sees lessons for business in Ferguson’s fall from grace.
“Every successful company needs to regenerate itself and I think that Bidvest is in the process of doing that,” he says. “I don’t want to be the guy who stays on too long.”
Still, you get the sense that this hands-on entrepreneur, whose presence dominates Bidvest in the way that Ferguson’s was allpervading at United, has no plans to retire just yet, even though Bidvest is working through a succession process.
This week, Bidvest ruled out a mooted London listing of its food services business, saying the board had concluded that it was not in the interest of shareholders, but said the group’s expansion would continue.
“Philosophically, as a business, if you don’t have in your DNA [the ambition of] getting bigger, I don’t think you’re a business and you need to quit,” he says.
“If you stop growing, you’re actually going backwards.”
The Bidvest CEO has a reputation as one of South Africa’s toughest, wiliest and most successful businessmen.
It is a reputation that inspires respect but can also evoke a certain wariness.
Consider some of the phrases one banker who worked with him chooses to describe Joffe: “He doesn’t take hostages”, “hardheaded”, and “a businessman who understands where returns can be extracted and is pretty relentless about pursuing them”.
In conversation, Joffe does little to counter such perceptions.
Relaxed in jeans and openneck shirt in his stylishly informal office in Melrose Arch, the swanky Joburg retail and business centre, he affably ad-
The one thing you need to know is that you’re not invincible
mits to fighting to get anything — “R30 or R300” — off a deal in the early days.
“We used to argue and argue until we got our deal,” he says with a glint in his eye.
Perceptions of his business manner are partly the result of Bidvest’s ability to spot the good in a bad asset, snap it up cheaply and turn it around, Joffe suggests.
“The contracts we used to enter into were always very important to us — we wanted to have the right deal.
“So maybe we did earn that reputation.
“I think even today a lot of people are intimidated to deal with Bidvest,” he says.
“In a way, unfairly, because I don’t think anybody can turn around and say we cheated them.”
Born to a South African father and Lithuanian mother, he began working at a family grain-milling business where he packed birdseed as a child.
He entered Wits, where he started studying a medicine-related degree, “because that was my mother’s bent — every Jewish boy had to become a doctor”.
But within weeks, he had de- cided that the medical profession was not for him and switched to accounting.
His first big break came in 1978, when, at the age of 30, he borrowed money from his parents to buy 50% of a pet food business for about R49 000.
Two years later, he bought out his partner and extended into canned dog food — with his wife driving a forklift truck and storing cans with understanding neighbours when they ran out of space at their Joburg business. Eventually, he sold the company for about $1-million.
Flush with cash, he and his wife headed to the US, where he played golf “every single day”.
Returning to South Africa in 1982, he did various jobs before buying Chipkins, a food services company supplying caterers, in 1988 for about R23-million.
Other deals followed fast and Bid Corporation was listed in Joburg a year later as the group’s tentacles rapidly spread into a range of sectors.
Today, the company has a market capitalisation of about $9billion, revenues of more than $16-billion and employs more than 140 000 people worldwide.
Anyone flying into South Africa is likely to have experienced a Bidvest operation: Bidvest buses ferry passengers to the planes; Bidvest Bank provides airport ATMs; the group operates an airport lounge and is involved in ground-handling and cargo services.
This illustrates a core feature of Joffe’s business model: identify an industry and set up complementary businesses to serve it.
“Let’s take a hotel,” Joffe enthuses. “We would supply it with food, with cleaning, with security, with its back office, janitorial services, maids.”
Thus has developed the “decentralised” conglomerate with business units run “independently and separately”.
The founder remains handson, but with a focus on looking after the money and keeping an eye on those he delegates to.
“I’m hands-on in the managing of people and I’m hands-on in the managing of allocation of capital. Those are the two things that are quite critical.
“If you’re going to get into this multi-business thing that we’ve got, what you can’t have is a very centralised business because then you need very skilled people to manage a diversified range of stuff,” Joffe says.
There have been bumps along the way.
He mentions a flawed French deal that cost Bidvest about R300million.
He is also still smarting from paying over the odds to increase Bidvest’s stake in Adcock Ingram, the South African pharmaceutical company, from 4% to 34.5% during a bitter battle for control with Chilean group CFR.
Bidvest won the fight this year in a saga that reinforced Joffe’s tough guy image.
But victory came at a cost, with Bidvest writing off about R1-billion after raising its holding in Adcock.
“Dealmaking and entrepreneurship is not about perfection — you can’t have a 100% success rate.
“If you do, then it’s not en- trepreneurship, it’s just conservatism,” he says.
After 26 years of leading the group, in which he retains a stake of about 1%, Joffe remains as eager as ever.
And the key lesson he has learnt along the way?
“The one thing you need to know is that you’re not invincible,” he says.
On the state of South Africa, Joffe seems to perceive everything in terms of business — even likening the country’s situation as it struggles with limp growth and widespread unemployment and poverty to doing a deal.
It is, he says, like an acquisition where everything seems amiss, but where first appearances can be deceiving.
“You see this and this is wrong, and you say to yourself: ‘If I take away this, this, and this, there’s a pretty picture behind all that.’ And that’s the story of South Africa in my view,” he says.
“When you look at South Africa, what people say about it and what people see in it is not necessarily good.
“This triple wave — bad management, corruption, crime — some of the issues are more complicated, [but] there’s quite a pretty picture behind it.”
On the plus side, he cites the “goodwill” of South Africans, but like many of his compatriots he worries about the poor state of the education system, saying that “more money needs to go into education”.
He also laments the lack of support for the next generation of entrepreneurs: “I don’t think we’ve got enough skill sets.” — © The Financial Times, London