ZUBER ISSA: ‘WE DIDN’T UNDERSTAND WHAT PRIVATE EQUITY WAS’

The balcony of Zuber Issa’s private meeting room offers views over a glassy expanse of water to snow-dusted hills in the distance.

“When it’s like this, it’s Switzerland,” the billionaire entrepreneur said as he pointed out landmarks to The Sunday Times on Wednesday. “On a good, sunny day, it’s like the Middle East somewhere.”

But this is not Zug or Dubai. It is Blackburn, with the Darwen Tower — built in 1898 to celebrate Queen Victoria’s Diamond Jubilee — visible across the Fishmoor reservoir, and the Blackpool Tower shrouded in winter mist.

Perhaps more remarkable is that Zuber’s brother, Mohsin, works from the same building.

After a shared boy-racer career of more than two decades, which took them from a single petrol station in Bury to a global forecourts empire and a debt-fuelled takeover of Asda, Zuber parted ways professionally from his elder sibling in June last year.

Mohsin, described by people who know them as the more aggressive and commercially ambitious of the two, decided he would stay invested in Asda and would help drive EG Group — their motorway fuel and retailing business — towards a £13 billion US float. Zuber, said to be more thoughtful and cautious, announced that he would buy a small package of UK forecourts from EG, using some of the proceeds from selling his 22.5 per cent stake in Asda. Aged 52, Zuber is starting again.

There were reports that Mohsin’s decision to leave his first wife, Shamim, for Victoria Price, a former EY tax adviser, had contributed to a rift between the brothers, who come from a close-knit Muslim community.

Zuber, who still lives next to Shamim in a compound in Blackburn — and sometimes works next to his own wife, Asma, in the open-plan part of his office — denies this.

Zuber and Mohsin Issa at EG Group in November 2019. The brothers have since parted company professionally

“When you’ve got a person who’s not happy in a marriage, and he finds happiness, you’re happy for him,” he said.

“It was a bit of a shock to the family, but we’re all grown-ups here.

We all understand. He’s found someone he loves and he cares for, and life moves on.”

Zuber claimed that he and Mohsin remained on good terms: “People do disagree, but there’s been no falling-out.”

An associate said Zuber had become frustrated with his brother in the three and a bit years when Mohsin thought he could run Asda as well as EG — each turning over well in excess of £20 billion.

But Zuber said his main reason for leaving was a divergence of opinions with TDR Capital, the swashbuckling private equity firm that bought into the brothers’ forecourts business in 2015 and backed their £6.8 billion swoop on Asda in 2020.

Having grown EG from 340 sites to about 6,000, and started to pay down debt from a peak of more than $9 billion, TDR wanted to cash in via a stock market listing.

Zuber, who was more concerned about “what my legacy is going to be about”, was less keen on getting out.

“It’s been rocket fuel all the way,” he said.

“And then comes the time when the private equity guys say, ‘We need to realise [a return].’ And you start thinking, ‘Guys, we’ve created this.’ ”

Zuber said he could have come to terms with an exit in three or more years’ time; a shorter time frame was “harder to digest”.

“We’ve built EG as a brand in the UK, and outside the UK, over the last 25 years, and I didn’t want that to just finish,” he said.

“So I quickly said to the guys, ‘Look, I want to stay in, let’s try and figure something out.’ ”

The compromise they reached was that EG will float in New York — probably next year, and probably under the name Cumberland Farms, the American convenience-store operator that it bought in 2019.

Zuber, who is a non-executive on EG’s board, said “the road map is starting now” on an initial public offering (IPO).

A fork in the road: EG’s headquarters in Blackburn.
Zuber Issa said the parting of the ways with his brother was not personal.
“People do disagree, but there’s been no falling-out”

JON SUPER FOR THE SUNDAY TIMES

He said it made sense to float in the US rather than the UK, the brothers’ home.

“We’ve got about 60 per cent of our earnings in the US and we’ve got comps there as well” — comparable companies such as Alimentation Couche-Tard and Casey’s.

“If we had still had [the majority of] our assets in the UK, we would have had a much closer look at a UK IPO.”

Zuber took back an initial 34 UK forecourts from EG and is running them under the name EG On The Move, although he is likely to rename it simply EG when he regains the rights to the brand at the point of the float.

He has since expanded to 47 and is about to add almost 100 when he buys the UK business of Irish service-station operator Applegreen.

Zuber said the deal, which will not include Applegreen’s Welcome Break business, would take EG On The Move’s turnover to more than £1 billion and give the company, which is presently focused on the northwest, a national footprint.

“We’re going to be investing in the sites and creating more jobs,” he said.

“It’s what we’ve done on our locations — opening up food, coffee, convenience and just modernising the sites.”

Zuber plans to leave the business to his family eventually (one of his daughters, Ammarah, works in EG On The Move’s finance department).

After he turns 60, he wants to spend more time on charitable works, such as the mosque and Muslim burial ground that he and Mohsin are building in Blackburn.

He said he would consider taking minority investment from private equity.

However, while he described TDR as “excellent” and said he had no regrets about their partnership, he added that “if we did it all again, I would do it differently”.

That would mean keeping control and not handing a majority stake to TDR, which bought 50 per cent of Euro Garages, as EG was then known, and had 45 per cent of Asda until it topped up with Zuber’s shares.

“Did we really understand what private equity was [at the outset]?” Zuber asked. “It’s a ‘no’.

“There’s a lot of people who ask the question, ‘How was your journey?’ Look, we can’t complain — this is the best journey we’ve ever had. But did we know where we were going to go? No one knew that.

All we knew was there was a business in Europe [European Forecourt Retail Group, owned separately by TDR], which was making less than we were making.

We were going to join [that and Euro Garages] together and get some synergies out of that.

But did we ever know we were going to go into Italy, France, Germany, Australia, the United States? No, we never.”

Zuber Issa on global growth and floating in America: “We’ve got about 60 per cent of our earnings in the US”

JAMES SPEAKMAN FOR THE SUNDAY TIMES

Along the way, the brothers acquired tycoon trappings, including two private jets funded through a convoluted arrangement under which EG lent them more than €39 million.

Zuber said the planes were “a tool for the business when we were doing acquisitions and we had to be in two, three places a week”.

He claimed that a story last year mentioning 50 flights to and from the Caribbean over two years related to their use by charter customers.

Zuber said that he and Mohsin had since sold the “smaller” Bombardier Challenger 350, leaving them with a Bombardier Global 6000, described as being fit to transport heads of state.

Many analysts think the brothers bit off more than they could chew with Asda.

The market share of the supermarket, which traditionally competed hard on price, has fallen from 14.8 per cent when the takeover completed to 12.5 per cent in the 12 weeks ending December 29. Like-for-like sales fell by 4.8 per cent in the third quarter of last year.

Before he left as chairman, Lord (Stuart) Rose said he was “slightly embarrassed” by the performance.

Zuber said he still believes that Mohsin and TDR have a chance of delivering on their original vision for Asda — turning its big stores into destinations, as they did with forecourts by adding coffee, convenience shopping and fast food.

He said they went into grocery thinking that “we should be able to change this industry where they’re all trying to be the cheapest in town, and they’re all trying to get market share through pricing.

But earnings and profitability should be coming from different avenues as well.

If you can’t beat them [discounters such as Aldi and Lidl], you’ve got to think of something else.

You can’t keep just taking the margin out, because the cost is going up.”

Zuber’s decision to split away marked a new chapter in a story that began when the Issas’ late father, Vali, came to the UK in 1968 with “£100 or less than that”.

He worked in the rag trade and the building industry, then bought a petrol station on Whalley Range in Blackburn.

Vali lived the same two-up, two-down terraced house until he died in 2021, declining ever to move into the big new home that his sons built for him and his wife in the family compound.

“Dad was a simple person, and he used to always say, ‘Keep your feet on the ground,’ ” Zuber said. He added that Vali also encouraged his sons to take opportunities. “There’s a lot of clever people in the world, but it’s about taking opportunities and a bit of risk and being honest with each other.

Where it all began: the Issas grew up in Balaclava Street in Blackburn

JON SUPER FOR THE SUNDAY TIMES

“You’re standing at the road, you’re looking at the traffic, left, right. Some people will just look left and they’ll walk across. But some people keep looking left, right, left, right. It’s the same in business.”

Mohsin and Zuber now have a combined fortune of £5 billion, according to The Sunday Times Rich List. A City figure who has worked with them said: “They started with nothing and ended up where they are. That is a significant achievement. It’s inevitable that as you get to maturity — they’re both in their early 50s — your view of life changes.

“It’s not surprising that one wants to go in one direction, one wants to go in the other. But remember that blood is thicker than water.”

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