Actis buys Tekkie Town stake and expects expansion
bdlive.co.za - Nov 7th 2014, 11:47
Private equity firm Actis has acquired a significant minority stake in a shoe retailer in SA for $65m.
The acquisition will give the retailer, Tekkie Town, the capital and expertise needed to expand broadly in southern Africa and possibly in West and East Africa.
"Tekkie Town at its heart is targeting the emerging consumer, selling great brands at great prices," Actis director David Cooke said in an interview on Tuesday.
"The other aspect of this is, it’s a cash retailer. The cash retailer, even in a much more challenging consumer environment, still shows good growth," he said.
Mr Cooke said that part of the $65m would go to the founder and executive chairman of Tekkie Town, Braam van Huyssteen, and another portion would be used to grow the business.
Mr Cooke would not disclose how much would go to Mr van Huyssteen and the exact percentage of shares Actis had bought in the retailer, indicating only that Mr van Huyssteen would continue to be executive chairman of Tekkie Town.
"I think investments like this are about partnerships. It’s not about buying businesses from its founders…. It’s taking the business to the next stage of growth."
Commenting on future growth, Mr Cooke said the strategy for Tekkie Town, which generates more than R1bn in annual revenue, would be to focus on countries in southern Africa and to explore opportunities in East and West Africa.
Tekkie Town distributes branded sports and lifestyle shoes. It was started in 2001 by Mr van Huyssteen but its roots date back to 1989.
Tekkie Town has 265 stores in SA, 10 stores in Namibia and one store in Lesotho.
"The initial investment Braam used to open the first Tropika (the forerunner of Tekkie Town) was R20,000, and the year was 1989," Tekkie Town MD Bernard Mostert said in an interview. "That store was opened in Mossel Bay after Braam completed his mandatory military service at the time."
Mr Mostert said that over the past five years Tekkie Town had been opening between two and six stores each month. He said that by February next year the plan was to have 275 stores.
"We believe there are a lot of growth opportunities for us. We are excited about the future.... We would like to focus our growth locally and in Africa," Mr Mostert said.
"We have never done an acquisition. Every single store we opened organically. The plan is to continue growing organically," he said, but added that acquisitions would not be ruled out.
Mr Mostert, who has known Mr van Huyssteen for more than two decades, said the retail company had grown partly due to the modest lifestyle of Mr van Huyssteen.
Mr Mostert said Mr van Huyssteen started the business with a single store. He then opened another store in George called Sports City. "He never lived extravagantly and he ended up with a lot of money," said Mr Mostert.
In 1999, through a friend, the Tekkie Town founder discovered that there was an overstocked distributor of Caterpillar shoes in Port Elizabeth. Mr Mostert said Mr van Huyssteen went to Port Elizabeth where he bought about 12,000 pairs of shoes and then he resold them to co-operatives.
At the turn of the millennium, Tekkie Town opened some stores through franchises, but this did not work very well and the stores were bought back.From DFM Publishers (Pty) Ltd
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