I am struck by how the mighty have fallen when I see that Barloworld might soon be delisted from the JSE. What remains of the business is soon to be sold to its CEO and a little-known consortium.
I used to visit Barlow Park to see top executives such as Robbie Williams (not that one), Derek Cooper and Warren Clewlow himself. Now I go there as it’s the only middle-market shopping centre in the Sandton area with a good Pep Home store.
The house of founder Punch Barlow in Impala Road at least has had a more glamorous fate, as home to some boutique asset managers, such as Westbrooke.
If Barlow Park is just a grim 1950s’ eastern European complex with ugly tower blocks, at least River Club, which Punch founded, has maintained its pristine beauty and exclusivity.
Barlow Rand, as it was called before the 1993 unbundling, was the largest industrial conglomerate in SA. By assets, not by market capitalisation. That honour went to SA Breweries (SAB), now part of Anheuser-Busch Inbev. SAB was also quite an unfocused conglomerate with underwhelming subsidiaries such as OK Bazaars, and furniture distributors and manufacturers with dull holding company names such as Afcol and Amrel.
But SAB was what CEO Meyer Kahn called a “temporary sole supplier” of beer — there could be lawyers’ letters if we used the term monopoly. It also had, through Amalgamated Beverage Industries, control of the Johannesburg and Durban Coca-Cola franchise, a near monopoly as Pepsi had limited operations.
It is also hard to believe now that Edgars was the dominant clothing and footwear retailer in the country and probably SAB’s best diversification.
The core business of Barlows, which remains the core of Barloworld, was its Caterpillar yellow metal (construction vehicles) franchise. This was definitely a quality business but hardly a licence to print cash like the SAB beer division.
Over the years it had acquired other good industrial businesses such as Plascon paints — eventually given the bizarre name Freeworld Coatings — and Pretoria Portland Cement, later PPC. These made up quite a logical collection of businesses.
But up to 1993, when the music stopped, Barlow Rand had ventured into areas outside its expertise. Under CG Smith it owned businesses in the consumer sector, which were leading lights on the JSE. It acquired Tiger Oats (now Tiger Brands) from entrepreneur Rudi Frankel — no relation to the stockbroking Frankels — and also owned top packaging business Nampak, which during the sanctions era acquired the local operations of British-owned Metal Box.
It got to the point that Barlows was acquiring businesses for their own sake. The one that nearly sunk them was Rand Mines, the smallest and definitely weakest of the Big Six mining houses. A topic for another day, left to a specialist in the mining sector.
The business that learnt to straddle industrials and mining best was Anglovaal, and its best assets remain in what is now AVI, iconic SA brands such as Five Roses, Freshpak and I&J, plus some international nice-to-have brands such as Kurt Geiger and Lacoste.
The point is that Barlows was eventually one of the least focused conglomerates in the world, comparable to many Japanese businesses as well as the long forgotten ITT or the somewhat more successful General Electric.
Investors were keen to unlock conglomerate discounts. It started with Brian Gilbertson’s unbundling of Gencor in early 1993, under pressure from its leading shareholder Sanlam. Gencor was turned it into a pure mining house after demerging the huge pulp and paper business Sappi, the fuel business Engen — later sold to Petronas of Malaysia — and spinning off the rest of its industrial businesses into the Malbak mini conglomerate.
Anglo American famously maintained its idiosyncratic structure for a while, believing that big is good. But the much weaker Barlows was forced into disposals, not least by anchor investor Old Mutual.
Warren Clewlow, Barlows’ group CEO, kept the industrial businesses behind, but spun off the consumer businesses into a stand-alone CG Smith, which was itself broken up a few years later. Rand Mines eventually fragmented and died.
A new style of conglomerate emerged in the 1990s, under charismatic entrepreneurs such as Bidvest, under Brian Joffe, and Imperial, under Bill Lynch. A different kettle of fish from the Barlows accountants, known popularly as the Natal bean counters.
These new conglomerates were eventually split up too. Bidvest spun off Bidcorp, and both remain successful businesses on the JSE. Imperial split into Motus and Imperial Logistics, which itself was delisted.
It will be difficult in future to have an interesting career as an investment analyst, financial journalist or fund manager in SA now that the titans have disappeared. Some of us feel nostalgic for better days. Even Anglo American is a shadow of its former self. After some bad investment decisions, it is a poor relation of the more successful global miners, such as BHP and Rio Tinto.
It would have been unlikely in 1990 to guess that the Nasionale Pers publishing house would be the largest share on the JSE — especially without its anchor investment, MultiChoice, which it has unbundled. The best SA Inc shares on the JSE now are in the financial sector: Capitec, Sanlam, FirstRand and Standard Bank, and not as we might have expected, Old Mutual, a first-rate business under Mike Levett and Gerhard van Niekerk when it listed on the JSE in 1999.
• Cranston is a former associate editor of the Financial Mail and writer of the book ‘The Mavericks’ on the SA fund management industry.
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