The stunning growth of industrial supplies giant Invicta Holdings over the past two decades offers valuable insight into how retail tycoon and serial risk-taker Christo Wiese can help shape a company’s destiny from behind the scenes.
Wiese, famously, does not run companies himself — but has the ability to find superb executives who are able to generate consistent returns and execute his strategic vision.
In the late 1990s, before Wiese emerged as the anchor shareholder, Invicta was a niche supplier of equipment, mainly to the agricultural sector. The business — where former CEO and current executive deputy chairman Arnold Goldstone cut his teeth as financial director — kept a head office in the Constantia winelands, and was perceived as a co-operative run by gentleman farmers.
It was steady enough, with turnover in year to end-March 1997 reaching close to R365m and profits around the R30m mark.
The game-changing transaction came with the acquisition of Bearing Man in 2001. But in subsequent years further important cogs were added to the corporate machine — most notably New Holland SA (2004), Doosan SA and Tiletoria (2007), Goldquest (2008), Wegezi and strategic BMG Agencies (2010), ESP (2011), OMSA, HPE, MacNeil and Mandirk Group (2012), Kian Ann Engineering (2013), SA Tool (2014) and Hansen, Sibuyile and Hyflo in 2015.
Invicta is now a R10.2bn/year turnover business with earnings before interest, taxes, depreciation and amortisation (Ebitda) comfortably clearing R1bn for the past three financial years. The quantum of Wiese’s original investment in Invicta would have been more than paid back by the dividends declared in the past three years, without even adding the recent large special payout.
His big investments Shoprite, Brait and (to a lesser extent) Steinhoff International have a momentum of their own — and have reinforced perceptions of Wiese as one of the smartest investors on the JSE.
He has probably left the returns generated by the JSE’s all share index in the dust, though this is near-impossible to calculate due to corporate activity and regular share buying.
The transformation of Invicta from a niche business into an industrial powerhouse may indicate what could transpire at some of Wiese’s "significant peripheral" investments — which would include diversified investment company Stellar Capital Partners (SCP), property hybrid Tradehold and commodity house Pallinghurst Resources.
SCP is a fledgling investment company, but already holds large stakes in electronics manufacturer Tellumat, asset manager Cadiz and Torre Industries. The company is also in the throes of buying Prescient’s financial services businesses and has pitched a takeover for cash-generative security technology manufacturer, Amecor.
There does not seem to be a specific operational focus or investment leaning at the well-capitalised SCP, which suggests a classic diversified investment trust in the making.
Tradehold, where Wiese remains the dominant shareholder despite some recent paper-funded transactions, is mainly centred on a sprawling portfolio of UK properties held under subsidiary Moorgarth.
But in recent years Tradehold has shifted into secured lending in the UK (via Reward), SA and African property (through a deal with the Collins Group) and solar power products. Wiese, interestingly, holds a significant minority stake in Texton Property, which holds SA and UK-based property interests.
Tradehold and Texton are jointly invested in the Broad Street Mall in Reading, which might well signal further corporate action down the line.
Wiese’s significant minority stake in Pallinghurst Resources has become all the more interesting since the retail tycoon turned his attention back to diamonds after recently taking a majority stake in overlooked Trans Hex Group.
It’s early days and Wiese, in conjunction with investment house RECM & Calibre, has only recently pitched a buyout offer to Trans Hex minorities. There’s no doubt Trans Hex, which has bolstered its ageing Orange River concessions with West Coast Resources (which belonged to De Beers), needs to diversify and bulk up its gem production. There are expectations that Trans Hex could look to consolidating smaller diamond mining operations locally and outside SA.
A curve ball might be Wiese pushing for Trans Hex to be reversed into Pallinghurst, which (aside from its sizeable platinum operation) holds a profitable interest in coloured gemstone producer Gemfields as well as the luxury brands group Fabergé.