Mohsin and Zuber Issa were cleaning the toilets at their parents’ petrol station, they say, when they hit upon the idea of transforming the filling station into a “shopping destination”.
It turned out to be quite a big idea … their petrol station empire has since expanded to nearly 6,000 forecourts across 10 countries. It has turned the brothers into billionaires and on Friday it provided them with the firepower to take control of the vast Asda supermarket chain.
In their teens, the brothers recognised there was little profit to be made from selling fuel, but that on the forecourt they had a captive market of motorists with little to choose from beyond sweets, crisps and unappetising packs of sandwiches.
1965 Asda comes into being when the entrepreneurial Asquith family, which started out with a chain of butcher’s shops in West Yorkshire, joined forces with the listed company Associated Dairies to launch a new business.
1989 George Davies, the founder of Next, is asked to produce a range of clothing for Asda. The George label blazed the trail for supermarket fashion and continues to be one of the UK’s biggest-selling clothing brands.
1991 Archie Norman, at the time regarded as one of Britain’s best young executives, takes charge of a struggling Asda. The share price has collapsed and he is the only person who applies to be chief executive of the retailer, which it is feared could go bust.
1999 Norman leads a successful turnaround with the help of Allan Leighton, another highly rated executive. The revival becomes the stuff of business school legend, sealed when US retail giant Walmart agrees to pay 220p a share for it (10 times its value when Norman took charge) after a bidding war with Kingfisher (owner of Woolworths and B&Q). The deal valued the chain at £6.7bn.
2005 Asda unveils plans to open a chain of discount food stores called Asda Essentials, but the plan is shelved the following year after the first two stores fail to deliver the expected results.
2010 Asda has a second crack at running small supermarkets, buying the Netto discount grocery chain for nearly £800m. However, the competition watchdog forces it to sell 25% of the stores.
2018 Sainsbury’s and Asda unveil a shock move to merge, creating Sasda, a group bigger than current market leader, Tesco. However, the deal is torpedoed after a year-long investigation by the Competition and Markets Authority.
2020 Walmart says it is in talks to sell a majority stake in Asda but the process is derailed by coronavirus. It starts again over the summer, with a £6.8bn deal finally struck with petrol station billionaires Zuber and Mohsin Issa and private equity firm TDR Capital. At the time of the deal, the Leeds-headquartered company has 146,000 employees and 584 supermarkets and makes profits of £805m on annual sales of nearly £23bn.
Their parents, Vali and Zubeda, who had moved to Bradford from Gujurat, India, in the 1970s to work in the textile industry, soon sold that petrol station. But the brothers, now 48 and 49, saved £150,000 and in 2001 bought their own forecourt in Bury, Greater Manchester, to test their idea of offering a wide range of fresh food and healthy snacks.
Their timing was spot on, with the big oil companies trying to offload their forecourts. The brothers took on those tired petrol stations and installed branches of Spar, Carrefour and other supermarket chains alongside Subway outlets, Burger King, Greggs and KFC. In 2010, the brothers’ EG Group opened the UK’s first Starbucks drive-through. They now operate 110 Starbucks stores, and are the largest franchise operator of KFC in the UK, with 125 outlets.
“Fuel sales were declining. We wanted to create a destination where you could get fuel, food-to-go and shopping. This is the formula and it works,” Zuber told the FT after the brothers won the EY entrepreneur of the year award in 2018. “We were fortunate that the big players were leaving the market just as we were growing.”
EG Group has borrowed big to build: it has £8bn of debt. However, it is now Europe’s largest petrol station operator, and has expanded to the US and Australia. The business has become the UK’s second-largest privately owned company , raking in more than £18bn a year in sales.
The brothers are thought to be sitting on a £3.5bn fortune, according to the Sunday Times rich list, which ranks them as the 43rd-richest people in Britain.
While the UK makes up just a quarter of the company’s sales, EG Group is very much a British company. Or more specifically a Blackburn company.
Zuber said consultants often advise the brothers to move their headquarters to London or Manchester, but “we are proud of our Lancashire heritage and to date have resisted such suggestions”. In fact, the brothers recently opened their new £35m head office overlooking Fishmoor reservoir in the city.
“The quality of life here is great. A lot of people do a few years in London then come to the north-west. They want to raise a family and have less pressure. We have got a lot of fantastic people that way.”
Leeds-based Asda, the brothers said, would not be moving either.
Phil Riley, a councillor on Blackburn with Darwen council, said the brothers, who were educated at the local Witton Park comprehensive school, had “put us on a the map for a good reason” and the people of the city were proud of the “Blackburn billionaire brothers”.
Riley, a friend of Zuber’s, said: “Blackburn runs through their blood. They are local men, who send their children to school in Blackburn, and they have been very insistent that their business remains in Blackburn. They want to stay here and we want them to stay here.
“It’s a truly remarkable a story, to have gone from next-to nothing to this,” Riley said. “Thebuyout of Asda illustrates their ambitions are undiminished.”
The brothers have teamed up with the private equity firm TDR Capital, which already owns the other half of EG Group, in their audacious £6.8bn deal to buy the UK’s third-largest supermarket chain.
Born in a two-up, two-down terraced home, the brothers are currently upgrading to five identical mansions on the outskirts of the city. Eight existing homes have been demolished to make way for the mansions, prompting fierce opposition from local residents who have criticised the scope of the “monstrous McMansions”.
Riley said the plans for the 5,000 sq ft mansions had caused disquiet among neighbours but said it was good for the city that the family were committing to Blackburn. “They are unusual homes for Blackburn, but then so is the presence of billionaires in Blackburn,” he said. “Billionaires do stuff that other people don’t do, but it is good that they are doing it here.”
The five houses have purposely been designed to be identical, said Riley, so that there will be no jealously between the brothers’ five children. Mohsin’s two grown-up children work at EG Group, but neither have been handed a top job and have instead been told to “put in the hours”.
“We provide the same opportunity that our parents provided,” Mohsin said, “albeit now they’ve got a lot more access to money.”
Riley said the brothers had been quick to offer help during the coronavirus pandemic, with a cash donation and a local warehouse to act as a food bank and distribution centre. They have also, he said, made big cash gifts to local hospital trusts.
The brothers have been conducting charity work for decades, and have committed to donating 2.5% of their wealth to their mostly educational charity, the Issa Foundation.
“Education is the only way to get people out of poverty,” Zuber has said. “Our parents came to the UK in the 1960s with nothing. This is our way of saying ‘thank you’, because the UK has provided us with a fantastic opportunity to build our business.”
The charity also helps budding entrepreneurs with “simple ideas” that can be grown into big businesses. “We just want to create future Zubers and Mohsins,” Mohsin said.
The brothers do, however, find some time and money for extravagances. There is a private jet, said to be kept in a hangar at Blackpool airport. And in 2017 they were unmasked as the mystery buyers of a £25m grade-II listed mansion in London’s Kensington, where they are completing a vast four-level basement.
The brothers bought the property, which will feature a swimming pool, spa, cinema and car garage with turntable and lift, after the previous owner was jailed for fraud.
At 23,000 sq ft, the house when complete will be 27-times the size of the average UK home. It will also feature a dozen toilets, no doubt for the brothers to keep clean and come up with new business ideas.
