When Mohsin and Zuber Issa jointly won the EY Entrepreneur of the Year 2018 UK award they had the world at their feet.
From cleaning the toilets at their parents’ petrol station to building the Euro Garages forecourt empire across almost 6,000 sites in ten countries, theirs was the ultimate rags-to-riches tale. And that was just the beginning.
Two years later the Blackburn-based brothers pulled off their most audacious coup yet when they took control of the Asda super- market chain in a debt-fuelled £6.8billion takeover.
Celebration: The Issa brothers and former EY executive Elizabeth Price attended the Entrepreneur of the Year awards in 2018
For good measure, a fortnight after the deal was announced, the pair were awarded CBEs for services to business and charity.
As interest rates soared and a cost of living squeeze hit cash-strapped shoppers, the Issas must have realised that the era of cheap money that had powered their remarkable rise was over.
Nonetheless, they doubled down and carried on buying.
While Asda’s warehouse network was sold, netting £1.7billion, plans to offload the grocer’s petrol stations to help pay down the debt were ditched.
Instead older brother Mohsin, 52, who was by that time running Asda, decided not only to keep its forecourts business, but to expand Asda into convenience retailing.
This was a major strategic shift for the food and clothing giant even if putting brands like Subway and KFC into petrol stations was how the brothers made their millions.
Deals: Asda snapped up the Co-op’s petrol stations for £600m
Asda snapped up the Co-op’s petrol stations for £600million, followed by the UK and Ireland forecourt operations of the Issa’s own EG Group in a deal valued at £2.3billion.
These acquisitions loaded the grocer with even more debt. Another £30million in interest payments will be added to the £400million annual debt service bill in February.
Mohsin Issa last week assured concerned MPs on Parliament’s Business and Trade Committee that Asda is ‘highly cash generative’ and that the borrowing burden of the outstanding £4.2billion debt – excluding leases – had fallen.
He also told them he saw ‘a real opportunity’ to ‘build an ecosystem’ for Asda’s 18 million weekly customers based around convenience stores.
However, not everyone is convinced that the new strategy will work – especially when taking into account Asda’s debt millstone.
Conservative MP Mark Pawsey claimed the Asda deal was ‘a massive leap’ for the Issas and that Mohsin lacked the retail ‘skills and background’ to run the Leeds-based retailer at a time when higher interest rates are having such an impact.
Mohsin insists he is the ‘best qualified’ for the job, but said he would hand over the reins when Asda finally finds a chief executive. The company has been trying to fill the post since respected retailer Roger Burnley quit in August 2021.
Asda continues to lose market share to the discounters Aldi and Lidl, but insists it will grow following the EG deal.
A company spokesman said: ‘Under the current owners, Asda’s store estate has grown from 630 stores to 859 today – and the business is expected to have 1,000 stores by March 2024, giving Asda its biggest estate in its 58-year history.’
He added that the firm also opened 81 rebranded Asda Express convenience outlets this month – a mixture of standalone and EG forecourt shops.
Asda has denied reports of a rift between the brothers over strategic or family issues.
MPs will have another look at the Asda deal when directors from TDR Capital – the private equity group with a 45 per cent stake in Asda – appear before them next month.
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