One of South Africa’s great entrepreneurs, Brian Joffe, tells the story of his Bidvest from its 1988 founding to the R200bn, 145 000 employee multinational group it has become. Joffe shares what he has learnt from operating in the global arena, making acquisitions and teaching his colleagues about business. Some fascinating insights provide a “how-to” guide for South Africa’s next generation of business leaders. The interview is broken down into three parts and below is the first one.
In this special podcast today, Brian Joffe, the founder and CEO of Bidvest is with us in the studio. Well, Brian we’ve just been chatting about the financial results for the year in June 2015 – R200b in turnover, but it actually goes back 27 years, to 1998, where you did your first acquisition at Bidvest. Before we get into the Chipkins deal and the involvement that you had with Investec, who did help you in those early days, what was Brian Joffe up to before Bidvest started?
Well, my career before that was with Manny Simchowitz. Actually, it started as a consultant to Standard Bank, Standard Merchant Bank at the time, where I work with Jacko Maree, strangely enough.
Then you abandoned him for Investec later on.
No, that is not the truth. What happened was I got there and then one of the things that Standard Bank had at the time was a company called UNISEC and part of UNISEC’s assets were sold to Manny Simchowitz, and he said, “I’ll only buy them on condition you come and work for me.”
I got involved in managing the trading businesses of the acquisition and I did that until, in fact, 1998, if my memory serves me right, and six months later I decided I was going to do my own thing. Jeff Liebesmann had already bought the business from W&A, from Manny.
Many people forget Manny Simchowitz. He was quite a maverick and, in fact, a very good businessman. Did he teach you much?
He taught me a lot. He’s not just an ordinary businessman. He’s a very, very superior businessman. One of the best, in my opinion that I’ve met and I’ve met many. A man who really understood what makes businesses tick, and what’s good and bad in a business, and he did teach me a lot.
What happened to him after Weil & Ascheim?
Well he emigrated and I speak to him from time-to-time but he’s not in any formal business. I’m sure he’s making a lot of money notwithstanding. He really was a competent man.
So when he left W&A and Jeff Liebesmann came in, did you stay with Liebesmann for any point in time?
No, I think we had a bit of conflict of vision, as to what should have happened at the time. I think from Jeff’s point of view he needed or wanted to sell assets from FSI, at the time, to W&A.
I, of course as a Chief Executive of W&A – I felt that I had a responsibility to the company rather than to the shareholder, so I think after a few months or so, I was packing up my pencils and my pencil box and I was on my way, to try and do something on my own.
Then you met with Investec. They were very supportive, or so it seems (from the outside) from the day that you began Bidvest.
Well, David Shapiro, who I’m sure you know well, actually introduced me to Investec because, at the time that we bought the Chipkins business. The Chipkins wanted to get our R12m of cash, so we needed to place those Chipkins shares with somebody, and David was of the view that Investec was the best place. That’s where I landed up and they’ve been good to me.
They bought the shares. They made some money out of it or made a lot of money out of it. From my point of view, we were being very good and because of my involvement with Investec, eventually Andy Lee came from Standard Bank and the relationship with him has been probably, almost the whole 28 years. It’s been good and Steven has been good to me too.
You’ve served on their boards and they’ve served on your boards. It’s a very close relationship.
No, I’ve never served on their board.
No, in fact, I really have taken a view not to serve on any other public company boards or any company boards for that matter. Yes, I’ve tried to stick to the knitting of looking after Bidvest and having no real conflicts of interest and that’s how it’s been. I’ve enjoyed Bidvest very much.
I guess you also have your own financial services business, and we’ll talk about that in a moment, but if you go back to the beginning. You’ve developed into a conglomerate, into a very efficient way to allocate capital. You can take it from one operation that throws out cash and invest into another one that, perhaps needs cash at that point in time – efficient from a tax perspective. Was that always in your mind when you did that first deal with Chipkins?
Yes, I think that if you go back to the original prelisting statement of Bidvest or Bid Corporation, as it was then known. We basically, said that we wanted to invest in trading services and distribution companies, and that’s what we’ve been trying to do.
I think what’s changed a little bit of course, (when we started) we still were in an era of sanctions and therefore the opportunities in South Africa were limited and, obviously, investing externally was almost impossible.
We tried to invest in areas that were on the fringe of major industries, so for the catering business, which was the Chipkins business, was for us on the fringe of the food business. We went into the closure business when we bought Afco, which was on the fringe of the packaging industry. We went into spices, which was again on the fringe of the food industry, in the main.
That’s how the business started to develop but when, of course, sanctions went and South Africa transformed, and the opportunities to develop – big, international activity came.
Well, then of course, our focus changed and I think the one difference is that I was always of the view that we needed to have a demand-focused business, rather than a supply-focused business, which is a concept that some people or many people don’t really know.
Maybe it’s not even a concept. Maybe it is just me, so if you take in more modern times, the airport for example, so we said ‘okay we want to be in the airport’ and we had a look at what do airports do and what are the airport customers, who are the airport customers?
Hotels – in and around the hotel, so if you take the customer profile of all of these activities they’re very similar. By enlarge, McCarthy is a little bit different but McCarthy was a really good financial dealer at that time, and our timing was impeccable there.
From that point of view, we were also opportunistic in some of the things that we do, and yes, so from that, those concepts, Bidvest developed but I don’t think that Bidvest is a conglomerate in the normal sense.
I think what differentiates Bidvest from other conglomerates is that we own, by enlarge, 100% of the activities, and that makes reference to the thing that you were talking about earlier. That we control the cash flows of various activities, so even without the ability to raise external debt from equity or whatever. We are able to shift around the cash flows from our various activities, in one way or another.
What kind of free cash flows does Bidvest generate now?
We generate almost 100% of the profit in cash, so we’re talking about ten billion, before obviously, interest and whatever, and in excess of that. It’s a big business.
You have to find homes for that money every year to continue growing.
Yes, I mean obviously some of it goes in taxes. Some of it goes in interest. Some of it goes in acquisitions but we also have some Capex, of course, that gets generated and used out of that but we do make a lot of acquisitions. We’ve done, well I don’t know.
I haven’t counted them but it’s a lot, and I think you have to have a good mix of acquisitions and/or organic growth.
I think the other fact, of course, is if you’re having – with devaluation (of course) also creates the negative impact of having to put more working capital in Rands, into a particular business. As the Rand devalues, your inventory costs you more, you have to carry more debtors or whatever and the like.
Well this demand-based model is something that you, as you’ve explained, started off right in the beginning. Another thing that started off very early was an offshore expansion, in 1995, when you made your first step in to Australia, and that’s become more than half of your turnover – 42 percent of your trading profit is now being generated from offshore. Was there always something in your mind that said you needed to go global?
Well, you have to take, and again, remember what the circumstance was. In 1989, when probably we did this thing, or in the early 90’s, we still had the impact of the old South Africa and everybody, including myself.
Even though I was a very optimistic South African because I stuck around here, felt that they needed, felt that they needed to have some kind of insurance, I guess.
We bought into Australia, which was, when you go back, South African’s couldn’t really buy prime businesses because the availability of capital out of South Africa was limited. You needed to buy underperforming activities and for us, and many other people who invested abroad, especially in Australia – we bought underperforming businesses.
There was a large period of time, when the press in Australia used to be very critical of South African managers. They’d say that we were ‘Japies’ and we didn’t really know what we were doing.
Well, they called all of us ‘Japies’, so not just the businesspeople.
Well, yes and so, we needed to work from, I suppose, a negative starting position. When we bought into Australia – I used to go there for a year, for the first year, and I used to go to the Australian management and I’d say ‘look, this is how we want to work and these are the measurements’.
‘Oh, yes, it’s very clever,’ and whatever. Then I used to go away and I used to come back in another few months later, or whatever and nothing had really been done.
Until one day I just took it, I’d had enough, and I sent one of our executives. I said, “I want you to go to Australia. I want you to fire the Chief Executive, and his assistant.”
We did that, in the process we found Bernard Berson, who worked for us in South Africa, and I said to him, “Bernard, you’ve got to come and help us. We’re going to do this.”
Was he in Australia already?
He was already there. He had gone to Canada. He didn’t like it in Canada, he had emigrated out of South Africa, and the very first decision that we took between us was that we were going to ditch one-third of the turnover of the business. From that day, the business has grown into what it is today.
Now, that must have been a pretty brave decision at the time, cutting out a third of your turnover.
Well, we had no alternative because, I suppose more importantly than the business decision – what they were doing is, they were taking frozen fish, laying it out overnight, taking a hosepipe, watering it down, and then selling it as fresh fish in the morning.
That wasn’t something that I really wanted to be part of, so that was, in a way justification for me not to get involved or not to be concerned about cutting back on the business.
I did it, though. There were many complaints from the customers because while we’re looking at it inwardly, from our own point of view – from a customer’s point of view that this was still quite a big, sizeable part of the Australian food service business and they didn’t know where to go and buy those products.
We just got out of a particular field, at the time but I think we’ve replaced all of those activities with proper, legitimate basis by a long way today.
Brian your biggest single division, by quite some distance, is your U.K. food services businesses. How did that start?
Well, it’s not by such a long way, as it so happens. Yes, it has obviously improved a lot in the last financial year. There had been a lot of activity in food service businesses for sale over the last 20 odd years, and we’ve been participating in these transactions just about in every single one because once we bought the first – people saw that we were in the particular business.
Booker Cash and Carry, as I think it was then called, had a Food service division and Booker, as a whole, wasn’t doing well. The board took a decision to sell by tender, the Food service division of that, and we were successful in that.
We bought Booker. If my memory serves me right, about £120m (£123,456.00 – if my memory serves me right). That was the start.
We then started off. We went down a road with the management in a particular – trying to implement some of our principles. I think to a large degree they bought into it but they never fully subscribed to what we wanted to do. I think the business became quite complex.
Not as simplified as we like to see businesses, and over time we decided to, similar to what happened in Australia – that we needed to make some changes and we did. We made some management changes. We started down the process of simplification and you can see the result, so when we bought the business the business profitability improved.
Then it went backwards and now it’s, again, on the uptake.
Well, R47bn turnover in that area of R200b overall – a huge part of your operation.
Correct, and we made some acquisitions there. We obviously had the original Booker business. We bought some fresh businesses there. We bought the PCL business in recent times, and yes, it’s a huge business and it’s a very significant part of the UK’s food service business.
There are two major players, us and Brake Bros and that represents probably more than 50% of the food service business.
The one that’s gotten away, so far, is the United States. Have you any – is it giving you sleepless nights that you aren’t operating there or is it just so competitive that maybe other markets are more interesting?
I never have sleepless nights because if I ever have any worry I switch on CNN, not CNBC. CNN and I fall asleep quite easily, within five or ten minutes. Look, the United States has been a challenge and I think we’ve been up and down with the United States over years.
It’s a very competitive place, very pricey, and not many people who’ve invested from outside of the United States have been very successful there. I think that, from our point of view, I don’t think we necessarily had the scale, going back some time, in order to be able to put a significant amount of capital into the United States, in the hope that we would get it right.
In the last, I suppose year or maybe a little bit longer, maybe two or three years. There’s been a lot of activity in the food service industry in the US you have the original purchase of US Food service with Sysco, which has obviously tried to buy US food service.
There’s PFG (Professional Food Group) – they’re also now looking to come to the market again, so there’s a lot of activity there. The question now is what will happen and I think, as you mentioned in the previous interview, of course Natie Kirsh is now a very young 86 or 84, and who knows what he’s going to want to do. I think that the United States has some opportunities.
Do you talk to Natie?
Listen, I’ve known Natie for quite some time. His father and my grandfather, I think, came to South Africa from Lithuania together, so I know him. I’m not close to him and I speak to him maybe once in a while, or maybe once in a couple of months. Yes, so I think that we obviously would like to see some internationalisation into the U.S. but we can’t do that at the given cost. It is obviously an expensive place.
Brian, sometimes comparisons can be odious, but in this instance, it seems to make sense. You have Markus Jooste, who’s a competitor of yours in the South African context, in auto and in certain of the areas that Bidvest operates in, the elder statesman in his field, being Christo Wiese. The two of them got together, as you well know. Natie Kirsh is somebody who perhaps could be the Christo Wiese in your life.
I don’t like to compare myself to anybody. I think Markus Jooste, in my opinion, has done a fantastic job. I mean, he’s built one of the biggest companies in the country, so I don’t really like doing comparisons. I don’t necessarily think that Christo Wiese and Natie Kirsh are of the same, (I don’t know what the word is) – of the same desire.
Natie is, the last time I spoke to him, he doesn’t see himself as 84 and Natie doesn’t – he has a fantastic business. He generates a significant amount of cash flow out of his business, he doesn’t need me to go and teach him what to do, and I don’t think Natie needs any money.
I think it’s a question of what Natie’s aspirations or family aspirations will be over time, but I just don’t see that Natie and I are the same combination as Christo and…
You are both outspoken and I like the comment that you made in last year’s annual report, where you said you feel that young accountants need to go in and teach the language of business (accountancy) in the schools in South Africa. We are growing generations of people in this country, who don’t have a feel for entrepreneurship, even the basic numbers. How strongly do you feel about that, being a chartered accountant yourself that you really need to know about numbers if you’re going to be able to run businesses?
Well, I think there’s understanding and then there’s understanding. Everybody can read but not everybody understands what they read, so I think it’s the same with numbers and accounting.
I think the numbers tell different stories to different people and I think the true entrepreneur sees differences in the numbers versus the true accountants. So the accountants report on fact and entrepreneurs see stuff, which is not written there.
I think the real differentiator is that when you make an acquisition – it’s a question of what you see tomorrow, rather than what you see in the accounting.
Yes, so I think that accounting is a good background and I think if you have a look at many of the entrepreneurs all over the world – they do seem to have accounting backgrounds. Of course, I don’t think it’s the be-all and end-all of what makes you good, as a businessman.
What about this point though of taking young accountants, and putting them into schools as a national service?
Well, I don’t remember actually saying it. I think what I said was that senior accountants or retired accountants – men who are 60 or 65, accountants to go back to work, for example, in the Revenue Department and to work in schools, and the likes. I think young accountants have their own careers to cope with.
You likened it to the medical field, to the young medics. In fact, you said internship.
Okay, well you see you have a better memory than I have because you write it down and I don’t. I do think, now that you remind me – I do think it’s a good idea that accounting students, before they go into business that they serve an apprenticeship.
Either in a government department, which could contribute to South Africa, or in the education system, because to me, in my small and humble way – I think education, is the key to South Africa’s sustainability. Without it, I think, we’re going to be fighting a very hard battle for a very long time.
You’ve always been perceived as extremely positive about South Africa. One of the points that you’ve made was that there’s great opportunity here but you need the three C’s – clarity, certainty, and courage. Are we making any progress on that front?
South Africa is a complicated place, and I think that the simple view, of saying it’s good, bad, or average – I don’t think that works. There are many constituencies that need to be satisfied in South Africa today and the problem with having many constituencies is that our government sometimes leans to its constituency rather than take a bold step as a leader in pushing the country in a particular direction.
Much of it is reactive stuff that’s going on, but some of it is not really positive for the country. Having said all of that, I don’t see South Africa as being totally bad. That’s not what I think.
There are some areas that I think could be improved but as I’ve said in another interview, if you look at transformation – just ignoring financial transformation for a moment – we transformed a total, civil service from what was a nationalist government before to the new South Africa today.
Okay, it hasn’t gone without a hitch, but it’s an amazing achievement. Not every department is great, but if you take (from my own personal experience) the Department of Home Affairs and Treasury etcetera, I think those departments are particularly good. Notwithstanding the tourism business, which I’m not sure I agree with, but I see that we have a vast skillset here.
Sometimes we’ve always believed that we can get better from overseas and we don’t trust enough in South Africa. My personal view is that if we can get past this BEE thing… I’m not saying we mustn’t have the transformation, but I think it’s the form in which it’s happening that I don’t necessarily agree with.
We need to create and develop black industrialists and I know the government has used the term. I’m fully supportive of creating black industrialists because I think that what’s required is capital and risk and those things need to be the transformation tools that drive new black South Africans to become great entrepreneurs.
The government in this country has spoken about creating 100 of these new black industrialists. If you took someone under your wing and you were to start teaching them (let’s begin with acquisitions because government will presumably give them R1m to go and make their acquisitions), which should one look at before you go ahead and buy a company? Anyone can buy a company, but buying it for the right price…
Why should it be that one of these industrialists becomes a significant shareholder in Bidvest? Why do we have to go and create something, which is already created?
Because you would like control… Isn’t that the whole political agenda?
Well, I think there are two different things. If we’re talking about industrialists that are going to run small corporates or SMME’s then of course, that it goes without saying that those people need to be there. However, if you want to create businesspeople that have influence, you need to be able to create that influence in the large corporates, and not in the small ones.
In order to create a successful SMME environment, you need to have some role models of big corporates. I don’t think a country can survive and I don’t agree with the principle that only small businesses can create jobs. Big business creates many jobs.
We have 140 000 of them and we don’t want to lose them. We’d like to have 180 000, 200 000 or whatever number of jobs and I think that these industrialists need to be playing in the main stream of South African business, and the mainstream is not in the SMME space.
Therefore, there needs to be some mechanism to support industrialists growing into the big corporate world, into our business and to others such as Imperial where they play a significant role. They can’t get control. In my opinion, control isn’t 50% of a public company. That’s not control.
Management and a piece of the action where you are at risk, is what I call ‘control’.
Let’s get back to that question about acquisitions (and if you’ve done dozens of them in the building of Bidvest). Where do you start? For instance, if I had a substantial business that would fit in quite nicely within your group, is it valuation? Is it the people? Is it the market segment? Is it just opportunism?
It’s probably a lot of that. For me, the actual finding of an acquisition has never been an exact science. The deal flow to Bidvest, contrary to what most people believe, isn’t massive because I think many people are very nervous about doing a deal with us because they think that we may be too harsh on them.
Many people don’t want us to do a good deal because they’re shown up afterwards, so it’s been quite a challenge. Of course, it has to fit within your criteria, to start with.
Is it in the right segment of the market that you want? The most important thing is to see what the business is going to look like tomorrow. In many instances, what happens is that people go in there and they say ‘this is a bad business. It’s not making any money’.
However, if you went in there and you saw that it was overstaffed for example (and that’s a bad one because it’s political)…
Where did you go wrong with Adcock Ingram? You have trumpeted your disappointment, which is a very admirable quality. Last year, you wrote R1bn off your acquisition there. Was it the heat of the chase?
I think that the disappointment and the lesson was that we did very limited due diligence on the business and we relied (a lot) on what was in the market.
Additionally, a lot of information that was published in relation to the potential acquisition of CFR/of Adcock… Had all of that stuff been there, we obviously wouldn’t be talking the same game.
The real disappointment, I guess, is that we weren’t astute enough to know that the information that was being put into the market wasn’t right. That in itself is a disappointment and I’m just surprised that nobody ever did anything about it.
Who should do something about it?
Well, I don’t know. There were many shareholders. Maybe some of them were very happy that we came along and paid R70.00-odd. Some of them were very disappointed that they got out at R52.00. Obviously, the PIC was there at the time. They had an asset, which was worth R17.00 and then translated into whatever it is – R30.50.
I just think that even – maybe – from a JSE point of view, the information was published out there. People bought shares, based on public information. The information wasn’t necessarily all true, but I think that’s all history. In the discussion of acquisitions etcetera, what happened is of academic importance.
In reality, we are where we are. We have an asset in my opinion, which we think we’ll get a return on in the short to medium term. It’s a very strategic business and I don’t think it’s one of those, which you could recreate at R50.00/share, and so we just bat on. It will be okay.
Brian you’ve embraced BEE in South Africa more warmly than most. The current Deputy President of this country was the chairman of Bidvest in 2005 – Cyril Ramaphosa – and when he left, you appointed your first black woman chairman in Lerato Phalatse. Are you of the opinion that that has assisted/helped your business in the various BEE transactions that you have done?
Unfortunately, BEE is a very subjective thing in South Africa. As we sit here today, we’re a Level 2 contributor and yet, having said that, that doesn’t mean that it’s a qualification for everybody.
You’d go into a business and they’d tell you that your model doesn’t work. We need to have somebody whose 51% black-owned (no cognisance being taken of the fact that it’s an impossibility to have public companies in South Africa with 51% control and no free flow).
As a concept, that doesn’t work. In certain instances, it’s been positive and in certain instances, it’s been negative. What I’ve tried to avoid is the fragmentation of Bidvest into its subsidiaries being sold off or being fragmented into a BEE process.
I don’t think that’s a good thing for Bidvest and I don’t think it’s a good thing for BEE either. If you take our BEE schemes, we’ve done three of them.
We were one of the very first. We did one early on in the transformation timeframe. I think we’ve generated a significant amount of free cash to people (in billions – probably more than R10bn). I’m very proud of that.
I’m not sure that at the end of the day, that we haven’t lost time in South Africa in a model that hasn’t generated more black industrialists (to use the terminology that’s being bandied around at the moment). I think we need more black businesspeople running around with influence and with capital.
If we can get to that, I think we can move on. The concept of BEE is not a business concept and that’s very complicated to manage if you’re a manager, managing a business for shareholders outside of South Africa, for example. It’s a necessary thing though, and we have to do it.
The quicker we do it, the better we do it. Maybe we need to have a much more aggressive policy, which gets us over the hump and stop going backwards all the time to try to find a model that works.
How do you keep that entrepreneurial ethos going within Bidvest? Maybe start with your head office. I know it’s small (in Melrose Arch). How big is your team there?
Well, it depends how you count. If you take the head office team other than support services (for example, secretarial and accounting, which is basically consolidation) we’re probably a team of five people, so it’s very small. Of course, we do have some regional head offices.
How many people are in your office in Melrose Arch? How many come to work every day?
Including secretaries, etcetera (although I’ve never really counted) – about 40.
You have a business of 145 808 people, according to your website so that is a very different, decentralised model. How do you keep those other 145 750 entrepreneurial?
We have some yardsticks by which we measure and strangely enough, not many of them are conventional ones.
Whilst profitability is an important one, sales is another, and people talk about ‘marginal’. From our point of view, what we try to do is to instil a concept of ‘return on funds employed’, which is called Joffe for ROFE, which they’ve sort of cloned, so that everybody in the organisation knows what the impact of what they do, is on the total.
It is very decentralised. I don’t know how many units – we have business units, it’s in the thousands. These people are allocated capital, in a sense that we would talk about it being allocated capital for a business or a company, or whatever.
We allocate capital, notionally, in a way to everybody in our group, so a tea lady for example has teabags as assets.
Even though they may be useable assets and the impact of one teabag versus two teabags, in an organisation where you have 140 thousand has some impact.
They understand or should know – they understand the concept of saying ‘what we do has the following impact on the total’. It maybe not in financial money terms but it is certainly in concept terms.
When the truck driver starts his truck in the morning, to warm it up – if he does it for two minutes or if he does it for four minutes, he knows that the impact of what he’s doing has some ramification throughout the whole organisation.
They understand the concept because one of the things that I do in Bidvest and it’s been sort of my, I don’t know, my own, little hobbyhorse. Is that when we buy businesses I lecture. I get the people together and I lecture to them how business works and what our expectation is.
I start from a very simple premise of your home and Aunt Jemima, as I normally call her, dies and she leaves you a million Rand. What will you do with it? You’ll find that 99% at whatever level you talk to, in an organisation, people understand what goes on in their homes.
They understand where to invest their money. They know what the rates of interest are, and they know the difference between the asset classes, the risk versus return, and stuff. They all know that. They all know how to budget at home, so they know all of those things.
It’s strange, if it you take exactly the same example with six noughts on the end of the one, and you add on another three. Then, of course, nobody understands what goes on, and it’s a different game altogether and people don’t understand what the business is about.
It’s too big and they get frightened, they get intimidated, and a lot of the concept goes out of the window. One of the things for us, a very important thing, is to make sure that people understand in micro terms of what is the impact of their job, on this total organisation of 140 thousand people.
Do they have a financial say or a financial incentive in that?
Well, yes. Many parts of the group is incentivised, either by equity, but everybody (in bonus terms), 13th cheques, or whatever, but there are many forms of incentives.
They are not necessarily only money, and one of the things that we’ve done, which I see as an incentive thing, is the football team, for example.
The football team has no financial basis to survive in Bidvest but I think it’s a real piece of motivation because motivation and incentivisation – they fit very closely together and I see that this being a very important part of incentivisation. Even though they don’t get a direct cheque for it, it’s also from their point of view an area to work for. We own Mr Vilakazi now and he is obviously quite a big profile footballer.
And that’s Wits, here in South Africa.
Bidvest Wits. You have, do you call it Bidvest Sunderland in the Premiership?
Well we used to sponsor but no. In the KZN Bidvest Wits, we are the financial owner of the business. We own 60% of the club or company and the university owns 40%.
In the case of Sunderland – we were the sponsor (the jersey sponsor) and not this season. Up until last year – we did two years with that.
For various reasons, at the time, we want to increase the profile. We’ve changed the name of many of the activities overseas from whatever they were to Bidvest, so we now have thousands and thousands of trucks running all over the world, with the Bidvest logo on, so it is very difficult to miss, and that was part of the process of getting there. No, they are different.
That decision to brand the group. You often are compared, well certainly in this country, with Warren Buffett, the American conglomerate industrialist. What he’s been doing, increasingly now, is changing companies names, within Berkshire Hathaway to the name Berkshire Hathaway. You are doing or have done, over the past many years taken these acquisitions and called them Bidvest, like Bidvest with Wits Football Team.
Well I didn’t know about Berkshire Hathaway but if I go back and tell you, why we did it. It wasn’t really a marketing decision. Well, maybe it is but when we went along and when BEE started in Bidvest and we decided that we’re going to do the BEE process, at the top. We needed to associate the subsidiary company with the holding company because otherwise people will say you’ve not empowered. What have you done? That’s why we started to add the tail onto Bidvest, with some of the names of the subsidiaries. The management, strangely enough, with this drive to Bidvest, as a name, has come from the management and not from the Bidvest executive at all. They want to be called Bidvest because they are proudly Bidvest, and they want to be associated with Bidvest. More and more companies in our group are dropping all of the other names that they have had, and they are calling themselves Bidvest. Bidvest Steiner for example, or Bidvest Logistics or whatever they are, so there is a very proud Bidvest culture in Bidvest.
Where does that name Bidvest come from?
Well, originally before Bidvest was even started or contemplated, when we bought the shell, we had to find a name and I used to go with lots of names. I actually wanted a numeric number in the name, and Tony Burman, the late Tony Burman, we miss a lot. He said to me, “No.”
He always used to tell me it’s rubbish, and he used to use other kinds of words, which I can’t necessarily use here, and one day in the shower, I thought to myself Business Innovative Developers, which was BID. BID was to buy and bid was to pray in Afrikaans, so we had Bid Corporation Limited, and that’s how it actually was listed originally.
Then I suppose six months later, or maybe a year later, we bought Currie Motors, the shell Currie Motors. I remember it had about 40 million of cash, and we needed to find a name for that, and then Lawrence Kaplan, who was at Werksmans at the time.
He said, “What about Bidvest?” I suppose they had Lidvest, and they had whatever else they had. He said, “What about Bidvest?” It sounded good to us, and that became Bidvest and, over time, we’ve built this name, which is proudly Bidvest.
You’re a young 68, as you keep reminding me. What is a young 88-year-old Brian Joffe going to be looking back on his company as? Are you still going to be going into the office like Warren Buffett, who’s not quite 88 but he does 7 days a week. Is that in your future?
No, I don’t think at 88 I’d want to be going into the office. I’d like to be doing other things that I’m very passionate about.
I’d like to do more photography. I draw and I’m into art in a way. I hope to be able to, still be good enough or healthy enough to be able to play some golf.
Yes, I see a more varied life, more travel maybe, but I haven’t really thought about it to be honest with you. I just don’t want to be doing nothing, whatever it is and I don’t think retirement is necessarily getting out of Bidvest. Retirement is getting out and doing whatever you want to do.
If you have a look at the development of Bidvest. It took you 20 years to get to R100b in turnover. It’s taken you seven years, thereafter to get to R200b in turnover. You now have the scale to be a serious player globally. Is that what gets you up in the morning, to look at this much broader manuscript that you can write your story on?
Look, the world is a big place and to be a major player is a very, very big jump for us. There are a few. SAB is one of the exceptional stories. I think we need to continue to do more of what we’re doing. We need to find the right acquisitions at the right kind of returns. We need to find the right geographic locations, and all of these things will contribute eventually to what the outcome is. I’d rather not say that I want to get to three billion. I would rather do the right deals and get to three billion without having that as a target.
Well, R300b whatever, so yes, I think that Bidvest has the scale to make quite a significant acquisition and it’s, of course got some very strategic assets/platforms in many of its businesses, which could be a very attractive thing to do other things with. I think the challenge now is to look at, as we’ve termed it in this set of financial statements – Bidvest, proudly tomorrow rather than Bidvest, proudly yesterday, and so we’ll work hard to make sure that Bidvest is successful in the years to come.
That is the end this special podcast ‘The Story of Bidvest’ with Brian Joffe, the founder and Chief Executive of Bidvest.