Christo Wiese's plan for Virgin Active owner: Get rid of bosses, assets

South African businessman Christo Wiese is part of a shareholder group proposing investment company Brait SE raise R3 billion  in a share sale and dispose of all assets except gym-chain Virgin Active.

Under the plan, Wiese’s Titan would team up with a new vehicle called Arbiter and Johannesburg-based money manager Mergence Investment Managers to control a combined 49.9% of Brait, according to an investor presentation seen by Bloomberg News. The parties would then remove the current management and embark on their preferred strategy.

Brait [JSE: BAT] shares jumped as much as 6.2% in Johannesburg before paring gains to trade 1.3% higher as of 11:56 a.m. Wiese and family currently own about 46% of the company. The proposal was earlier reported by newspaper Business Day.

“I get approached regularly with opportunities and together with Titan, I was approached with this proposal,” Wiese, 78, said by phone on Thursday. “There is nothing definite.”

Wiese was one of South Africa’s richest men before the near collapse of Steinhoff International Holdings NV, in which he was the biggest shareholder. His net worth is about $628 million, according to the Bloomberg Billionaires Index. As part of the plan for Brait, Wiese would reduce his exposure by selling shares to Arbiter.

The intervention follows an extended share-price decline at Brait, which has struggled under the burden of embattled U.K. clothes retailer New Look, which it bought for 780 million pounds and now values at zero. The stock has more than halved in 2019, valuing the firm at R7.3bn.

“We try and be active shareholders where we can be,” Brad Preston, head of listed investments at Mergence, said by phone. “We have discussions with other shareholders on how to unlock value in companies where we have an interest.”

Brait’s other assets include British grocer Iceland and South Africa’s Premier Foods, which makes Blue Ribbon bread and Snowflake flour. “A separately listed Virgin Active would enable to the company to continue investing in growth,” the presentation said.

Wiese and his associates are proposing new directors including renowned activist investor Brian Myerson, who received a three-year ban from takeover activity by a UK regulator in 2010.

“Brait remains committed to its investment strategy, materially reducing the debt on its balance sheet, and driving performance in its companies,” a spokesman said in emailed comments. “As of today, Brait has not received any proposals from Mergence Investment Managers, Arbiter or Brian Myerson.”

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