THE DYNAMIC duo behind EG Group, a multinational convenience store and fuel retailer, and Asda, the third largest grocer in the UK, Zuber and Mohsin Issa have built an impressive business empire through their vision, hard work, and strategic acquisitions.
However, the Indian-origin brothers from Blackburn are now executing a deleveraging strategy – in a bid to reduce debts. This has seen the brothers selling the majority of EG Group’s UK and Ireland fuel, foodservice, grocery and merchandise business to Asda for a cash consideration of £2 billion. The deal allows the EG Group to focus on international growth and the energy transition to alternative fuels and EV charging, following an agreement in November to acquire Tesla’s latest ultra-fast charging units for their rapidly growing elective vehicle charging business, evpoint. It is the first deal of its kind entered into by Tesla with a third-party charge point operator in Europe. “The sale of the majority of EG Group’s UK business to Asda represents an important strategic step for the company,” Zuber Issa commented on the completion of the deal at the end of October last year. “Following this transaction and the successful extension of the debt maturities to February 2028, EG Group will benefit from a sustainable capital structure from which to build for the future.” EG Group will continue to operate 32 sites in the UK, and retain certain foodservice brands, including Cooplands, its wholly-owned bakery business, as well as franchise businesses with the Starbucks, Sbarro, Chaiiwala and Cinnabon brands. The company has also entered into an agreement to sell all its 218 KFC franchise res[1]taurants in the UK and Ireland to KFC brand owner Yum! Brands.
It has been the largest KFC franchisee in the UK and Ireland. They have also sold 63 of its US convenience stores to Casey’s General Stores and agreed a $1.5bn sale and leaseback on a portfolio of its sites in the US last year. Proceeds from these transactions allowed the group to complete the process to successfully amend and extend the remaining $3.2bn (£2.53bn) of its term loans through the extension of the maturity date to February 2028. And, despite these divestments, the EG Group remains a leading global convenience retailer, generating over $25bn of annual revenue and more than $1bn of EBITDA, across 5,500 locations in the US, Australia, Germany, France, Italy, the Netherlands, Luxembourg and Belgium. Meanwhile, the Issa brothers have channelled their acquisitive spirit to Asda, and the supermarket group is strengthening its fuel and convenience proposition with the purchase of EG business and the 132 forecourts from Co-op in October 2022. “Our conviction is that we are here for the long haul. We want to retain this business (Asda). It is about growth and how we grow the business. We have added convenience to it. We have increased colleague pay.
Our customer experience is improving as we speak and we are absolutely focused on delivering value for our customers and ensuring it is a better shopping experience,” Mohsin Issa had told MPs in December. He was speaking at an evidence session of the business and trade select committee of the House of Commons in December on the topic of private equity and the retail sector. Addressing the issue of Asda’s downgrading by the credit rating agencies, Mohsin cited the business investing in staff pay and prices as a reason for the development. “We chose to invest, which is why we were downgraded. It is not only about that but also about us not having convenience estate, which is widely documented by the rating agencies in terms of the resilience of the business—we just have big boxes. Hopefully, you will have seen us address that as part of the Co-op acquisition and the EG acquisition as well—having a convenience platform,” he told in reply to a question. In February this year, Asda has opened 110 Asda Express convenience stores– a record for a single month, accelerating its growth strategy in convenience.
The openings have also brought Asda’s combined supermarket and convenience estate to its biggest in its 58-year history as the business hit the landmark of 1,000 stores. Asda, which aims to become the second largest grocery retailer in the UK, has plans to convert all 470 convenience sites acquired from the Co-op and EG Group to Asda Express before the end of March. Mohsin also told MPs that the business has given two pay rises in the two years that they have had ownership, amassing to £264.8m. They have also invested £140m into cost-of-living pressures and into pricing. “We did that to establish long-term credentials for us, investing in the customer and doing what is right for our customer for the long term. Obviously, we sacrificed profits at 25 per cent in order for us to look after the customer and our colleagues,” he said. The comment, in fact, reflects the brothers’ intrinsic understanding of their customer base, which has been the foundation of their success. They have built their international convenience retail business from a single filling station in Bury, Greater Manchester, before they broke into the big league of the UK grocery sector with the £6.8bn acquisition of Asda from Walmart in October 2020, taking Asda back under British ownership for the first time since 1999. The Issas attended their local comprehensive school in Blackburn and began their careers working in their father’s local petrol station. Their parents came to the UK from Gujarat, India, in the 1960s. Mohsin, 52, and Zuber, 51, have founded the EG Foundation (corporate) and ISSA Foundation (personal), which supports individuals, communities and organisations. They retain a strong connection to their hometown, Blackburn. They also sponsor a local football team, Euro Garages FC, there. Zuber received an honorary fellowship from the University of Central Lancashire in July 2023 in recognition of his significant contribution to business and charity, and in particular to Lancashire and the North West. The brothers were awarded a CBE in the 2020 Queen’s Birthday Honours List.