Issa brothers: How to turn a petrol station into an empire for billionaires
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 the most successful self-made businessmen in the UK.
Zuber Issa’s decision to sell his stake to funds managed by private equity firm TDR Capital marks the first major step in different directions for the brothers from Blackburn.
The deal means that Zuber will no longer have any dealings with the Leeds-headquartered Asda, which he and his brother teamed up with TDR in 2021 to acquire it for £6.5bn.
At the same time, it was announced that the brothers’ EG Group had agreed to sell its remaining UK forecourts business to Zuber for £228m.
As a result, Zuber will step down as co-chief executive with his brother continuing to lead the business.
He will return his existing shareholding and remain on the board as a non-executive director.
The brothers will however remain business partners and have a number of investments including Manchester-headquartered sports apparel company, Castore.
But this deal is the first time in their more than 20-year career that the brothers will be moving in different directions.
How the Issa brothers started their empire
Mosin and Zubar Issa were born in Blackburn, Lancashire, in the early 1970s.
Their parents, Vali and Zubeda, moved to the UK from Gujarat, India, in the decade before, initially to Bradford, to work in the textile industry before turning their hands to running a petrol station.
It was in the toilets of that petrol station that the brothers said they had the idea of transforming it into a “shopping destination”.
They realised there was little profit to be made from selling petrol but that the site had a captive market of drivers and passengers.
The idea led the brothers to save up the £150,000 they needed to buy their own forecourt in Bury, Greater Manchester, in 2001.
Their move coincided with the oil giants attempting to offload their forecourts and the brothers pressed home their advantage.
The next step
The brothers continued to expand their business, Euro Garages, across the country, snapping up forecourt sites where they saw an opportunity.
They formed partnerships with brands including Subway and Starbucks and revamped their sites, which in most cases had become tired and outdated.
By 2015 the business had expanded so much that it caught the attention of private equity giant, TDR Capital.
The firm, whose portfolio has featured the likes of David Lloyd Leisure, Keepmoat Homes and Stonegate Pub Company, took a stake in the company.
The move marked the start of a partnership which would see the fortunes of the brothers’ business transformed.
The impact of private equity
The first major change happened a year later when Euro Garages acquired the Dutch-headquartered European Forecourt Retail Group to create Intervias Group, which was later renamed EG Group.
The business had been founded in 2007 and was the European energy retail and marketing arm of Delek Group before it was acquired by TDR Capital in 2014.
At the time, EFR comprised over 1,100 retail sites in Benelux and France.
As a result the private equity firm took a 50 per cent stake in the newly-formed group, with the Issa brothers holding 25 per cent each.
But that was only the start of the expansion the brothers and their private equity partners had planned with various acquisitions being made in the years since.
The transformational deal for Asda
Owned by US giant Walmart since 1999, the Issa brothers teamed up with TDR Capital to acquire the supermarket giant.
The deal was completed in 2021 after EG Group also agreed to buy Asda’s forecourts business for £750m in February.
The brothers made their move for Asda after the Competitions and Markets Authority rejected its merger with Sainsbury’s, a deal which is best remembered for Sainsbury’s CEO Mike Coupe being filmed singing “We’re in the Money” after the deal was initially announced.
Recently, City PM reported that EG Group surged back into the black in 2023 following its £2bn 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, having first announced the deal in May 2023.
The deal saw the group’s UK&I fuel, foodservice, grocery and merchandise business taken on by Asda.
EG Group now operates in the USA, Australia, Germany, France, Italy, the Netherlands, Luxembourg and Belgium – with its 32 sites in the UK being sold to Zubar Issa.
Recently-filed accounts with Companies House revealed that EG Group reported a $1.4bn (£1.2bn) pre-tax profit for the year, up from a los of $258m ($415.5m) in 2022.
However, with the Asda deal taken out of the figures, EG Group made a pre-tax loss of $125m (£98.3m).
The new accounts also showed that EG Group’s revenue fell from $30.6m (£24m) to $28.3m (£22.2m).
The Issa brothers’ other interests
The Issa brothers are one of the largest investors in Mancheser-based sports apparel company, Castore, through their Monte Group company,.
They also own the Stanley House Hotel & Spa in Lancashire and have invested £30m into a British zero-emission company that is developing a lorry running on hydrogen fuel cells.
On a personal level, it was reported earlier this year that Mohsin Issa was in a relationship with a senior partner at EY which resulted in the firm removing itself as Asda’s auditors in July 2023.
In a statement, representatives for the pair said she was not an audit partner at EY and has never worked on the Asda business.
EY confirmed to her that she met all her obligations and made all appropriate disclosures to the firm’s ethics and compliance teams throughout her career.
Issa brothers and private jets
Earlier this year, City PM reported that the private jets of the Issa brothers flew between London and the Caribbean more than 50 times over a two-and-a-half-year period.
The pair borrowed £39m from their petrol station empire to fund their purchase of the two aircraft.
The arrangement prompted scrutiny from MPs amid concerns Asda’s complex structure and high debts stopped it keeping costs lower during the cost of living crisis.
Darren Jones, chair of parliament’s business and trade select committee, wrote to Mohsin in September with a range of questions about the unsecured loans.