The news that one of the billionaire Issa brothers had decided to sell his shares in supermarket giant Asda marked the end of an era for some of Britain’s most successful self-made entrepreneurs.
Zuber Issa’s decision to sell his stake in funds managed by private equity firm TDR Capital is the first major step in different directions for the Blackburn brothers.
The deal means Zuber will no longer do business with Leeds-headquartered Asda, which he and his brother acquired with TDR in 2021 for £6.5 billion.
At the same time, it was announced that the brothers’ EG Group had agreed to sell its remaining UK petrol station business to Zuber for £228 million.
As a result, Zuber will step down as co-CEO while his brother will continue to lead the company.
He will return his existing shareholding and remain on the Board of Directors as a non-executive member.
However, the brothers remain business partners and hold numerous shareholdings, including in the Manchester-based sportswear company Castore.
But this deal is the first time in their more than 20-year career that the brothers have gone different ways.
How the Issa brothers founded their empire
Mosin and Zubar Issa were born in Blackburn, Lancashire, in the early 1970s.
Her parents, Vali and Zubeda, had moved to the UK from Gujarat, India, a decade earlier, first to Bradford to work in the textile industry before moving on to running a petrol station.
According to their own statements, it was in the toilets of this gas station that the brothers came up with the idea of turning it into a “shopping destination”.
They realized that there was little profit to be made from selling gasoline, but that there was a steady market of drivers and passengers on site.
This idea led the brothers to save the £150,000 they needed to buy their own petrol station in Bury, Greater Manchester in 2001.
Their move coincided with oil giants attempting to divest their gas stations, and the brothers took advantage.
The next step
The brothers continued to expand their business, Euro Garages, across the country, buying up gas station properties wherever they saw an opportunity.
They partnered with brands like Subway and Starbucks and redesigned their websites, which were mostly uninspired and outdated.
By 2015, the business had expanded so much that it caught the attention of private equity giant TDR Capital.
The company, whose portfolio includes David Lloyd Leisure, Keepmoat Homes and the Stonegate Pub Company, took a stake in the company.
The move marked the beginning of a partnership that would take the brothers’ business to a new level.
The impact of private equity
The first major change came a year later, when Euro Garages acquired the European Forecourt Retail Group, headquartered in the Netherlands, and formed the Intervias Group, later renamed the EG Group.
Founded in 2007, the company was the European energy retail and marketing arm of the Delek Group before being acquired by TDR Capital in 2014.
At that time, EFR comprised over 1,100 retail locations in the Benelux and France.
The private equity firm then acquired a 50 percent stake in the newly founded group, while the Issa brothers each held 25 percent.
But that was just the beginning of the expansion that the brothers and their private equity partners had planned. In the years that followed, several acquisitions were made.
The transformative deal for Asda
The Issa brothers, who have been part of US supermarket giant Walmart since 1999, have teamed up with TDR Capital to take over the supermarket giant.
The deal was completed in 2021 after EG Group also agreed to acquire Asda’s petrol station business for £750 million in February.
The brothers made their move to Asda after the Competitions and Markets Authority rejected the group’s merger with Sainsbury’s. The deal is best remembered because Sainsbury’s CEO Mike Coupe was filmed singing “We’re in the Money” after the deal was first announced.
Recently, City AM reported that EG Group would return to profitability in 2023 following its £2 billion deal with the supermarket giant.
EG Group completed the sale of the majority of its UK and Ireland operations to Asda in October last year, after first announcing the deal in May 2023.
As part of the deal, the group’s fuel, catering, grocery and retail businesses in the UK and Ireland were acquired by Asda.
The EG Group now operates in the USA, Australia, Germany, France, Italy, the Netherlands, Luxembourg and Belgium – its 32 sites in the UK were sold to Zubar Issa.
Accounts recently filed with Companies House show that EG Group reported a pre-tax profit of $1.4 billion (£1.2 billion) for the year, following a loss of $258 million (£415.5 million) in 2022.
However, excluding the Asda deal from the figures, EG Group reported a pre-tax loss of $125 million (£98.3 million).
The new accounts also showed that EG Group’s revenue fell from $30.6 million (£24 million) to $28.3 million (£22.2 million).
The other interests of the Issa brothers
The Issa brothers are one of the largest investors in Manchester-based sportswear company Castore through their company Monte Group.
They also own the Stanley House Hotel & Spa in Lancashire and have invested £30 million in a UK zero-emission vehicle company that is developing a truck powered by hydrogen fuel cells.
On a personal level, it was reported earlier this year that Mohsin Issa had a relationship with a senior partner at EY, which led to the firm withdrawing from his role as Asda’s auditor in July 2023.
In a statement, representatives for the couple said she was not an audit partner at EY and had never worked in the Asda business.
EY confirmed that she had fulfilled all her obligations throughout her career and provided all required disclosures to the company’s ethics and compliance teams.
The Issa brothers and private jets
Beginning of the year City AM reported that the Issa brothers’ private jets flew more than 50 times between London and the Caribbean over a period of two and a half years.
To finance the purchase of the two aircraft, the two companies borrowed £39 million from their petrol station empire.
The deal attracted widespread attention from MPs, who feared that Asda’s complex structure and high levels of debt were preventing the company from keeping costs down during the cost of living crisis.
Darren Jones, chairman of Parliament’s Business and Trade Select Committee, wrote to Mohsin in September asking him a series of questions about the unsecured loans.
