Tekkie Town sells a significant minority stake to Actis for $65m

CAPE TOWN — Just recently in the Biznews newsletter Alec wrote about the proliferation and quality of SA entrepreneurs attributing their prodigious-ness to something in the water. Braam van Huyssteen, Executive Chairman of Tekkie Town is part of this prestigious group and has just sold 42,5% of his business for $65m to Actis. Braam explains why he is a pragmatic optimistic about our beautiful country; the type of business partnership he was looking for and how he plans to expand his very successful business into Africa. – Candice Paine 

Interview transcribed below:

Alec Hogg: Actis announced a $65m investment into South African sports and lifestyle shoe retailer, Tekkie Town for a significant minority stake in the company. We hope to find out a little bit more detail on that. The Founder and Executive Chairman of Tekkie Town, Braam van Huyssteen is on the line. Braam, $65m; we were trying to work out (David Shapiro and I) what that meant….what Tekkie Town is worth in the last 13 years. If it’s a minority stake then clearly, that’s under 50 percent so you’ve built – easily – a R1bn business in that time.

Braam van Huyssteen: Good afternoon, Alec. Yes, thank you very much. I would be interested to know what your final answer was after you did the calculations. Jokes aside, I happened to be born in 1965. We’ve been very fortunate and blessed that we’ve managed to build a lovely business over the last couple of years, obviously, with the help of many people and we’re very excited about our association with Actis going forward, as it seems to be the correct partner in assisting us with our future plans, being growth into Africa.

Braam, we hear so much negative information from South African businesses. You’re Entrepreneur of the Year (2011) for this country. You’ve now gotten a big capital injection. How are you reading the South African economy or the South African future?

Different people might see it differently. I think South Africa is still a country of opportunity and it’s not only ourselves, but also many other businesses who have proven that. Yes, we do have our challenges. I listened to a program this morning. Dawie Roodt spoke about unemployment and our lack of production and minimum wages, etcetera so these issues are all close to our hearts. However, if we can lift production we would obviously have a lesser problem in having to make laws in terms of minimum wages, etcetera. As far as South Africa is concerned, I’m very positive. I think that besides being the most beautiful country in the world, there’s a lot of opportunity and I think anybody who’s willing to work hard will still reap these rewards.

You’ve certainly shown that with 265 stores around the country. Yesterday, we were having a look at the consequences of the Ellerines collapse, if you like. You would be in many of the towns that some of those Ellerines brands are at. Would it be an option for you to maybe pick up some of their stores?

Yes, I actually happened to listen to your program yesterday. I was in my hotel room. I obviously have access to many of these stores that are becoming available now.   We’ve been provided with all those lists, either from brokers or from landlords. Our particular model…our preferred size stores is probably a little bit smaller than the average furniture store so maybe, there’s not that big a benefit. There’ll probably be a little bit of pressure on the landlords, but what we would like to see is them maybe subdividing some of these premises. That will then create opportunity for the people who probably weren’t that reliant on credit business in the past – as we are one example of that.

Do you have opportunities that might be opening for up? For instance, if you weren’t in Bethal and there’s a store opportunity in Bethal now with the collapse of Ellerines. Do you see much of that?

Yes. Well, we happen to be in Bethal. We are in the Wimpy Centre with the Moolman Group so we haven’t let that one slip, but I believe there’s quite a bit of opportunity in some area – I think, in the Eastern Cape at the Umtata region. There are many areas and maybe some of the more mainstream centres, which had big boxes for these furniture-type stores, and I think it can be to both the landlord as well as our benefit if they can subdivide some of these stores into more productive units. Yes, we continuously look at opportunities. We pretty much, don’t want to open more than say, 25 to 30 stores per year because that’s what we are comfortable with but yes, obviously, a lot of opportunity therein, right now.

Why did you decide to get into bed with Actis? What was it about them that appealed?

Yes, that’s a very good question. Your previous guest…we got close to an engagement with the Old Mutual Group and maybe a few others before, but I think what was most important to us was to find the right partner. Not necessarily the right price, the right money, or the right capital injection. For us, it was somebody that would assist in our plans going forward and nobody suited the profile better than Actis with their experience of business in Africa. They already do own some other businesses there. They know about many of the challenges because, make no mistake, Africa is not just something that you can venture into without a lot of homework so Actis fitted the profile the best in a long way, if I have to compare it to all the other people that we had over the last four years.

So it’s much more than just the financial injection. What share did you give them for that 65-million?

We gave them 42.5 percent and I’m sure that from there, you can make your calculation.

I think I beat David Shapiro. The Founder and Executive Chairman of Tekkie Town: congratulations on building a R1bn value business – well over R1bn value business in the last 13 years and an inspiration to other entrepreneurs who are looking at South Africa perhaps a little bit pessimistically at the moment. It can be done. It can be done.

Visited 90 times, 1 visit(s) today