Old Mutual bets big on golf, buys control of ProShop, World of Golf

By Colin McClelland

(Bloomberg) — Old Mutual Plc’s private-equity unit bought a majority stake in MoreCorp, the largest South African golf- equipment retailer, as the investor bets demand from an expanding upper-middle class will overcome slowing economic growth.

The asset manager paid more than 300 million rand ($20.7 million) for a 70 percent stake in the company that controls more than 40 percent of the country’s golf market with The Pro Shop, World of Golf, and Playmoregolf outlets. MoreCorp also owns Cycle Lab, the nation’s largest cycling retailer, according to the investor. Co-founder Darryl Egdes retains 20 percent and management owns 10 percent, the Old Mutual team said in an interview on Tuesday.

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“Some people’s first instinct would be that golf is a dying game — we don’t believe that at all,” Jacci Myburgh, head of private equity, said by phone from Cape Town. “We see a lot of consumers transitioning into the upper-income lifestyle market over time who can take up golf.’’

South Africa, the continent’s most developed economy, narrowly avoided recession in the third quarter, posting 0.7 percent annualized growth. Old Mutual bought out Rhys Hughes, who co-founded MoreCorp in 1976, because high-end consumer businesses are less tarnished by the nation’s slow growth, Myburgh said. The investor plans to make a similar investment within a month to reach the halfway mark in spending from its 4 billion rand Fund IV, he said.

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MoreCorp will expand Cycle Lab by using the same large- store format used in its golf business, Investment Principal Farhad Khan said in the same interview. Two new 2,500-square- meter (27,000 square-foot) stores will open this week in Pretoria and Johannesburg, with Cape Town and Durban outlets to follow within two years, he said.