STEPHEN CRANSTON

With MS Teams we have all got used to people from overseas appearing virtually at conferences and award ceremonies. So it was quite unexpected to me that Brian Joffe attended in person at an awards ceremony at the weekend.

Investec invited me to the Jewish Achievers Awards, and Joffe won top prize ― the best director Oscar, if you like. Joffe built up Bidvest and Bidcorp from scratch into businesses with a combined market capitalisation of well more than R250bn. He said when he left there were 140,000 Bidvest employees, which implies that including dependants he was responsible for a population equivalent to a city the size of Mbombela.

Joffe flew in from Tel Aviv to get the prize, the Kirsh Family Lifetime Achievement Award, which is dedicated to anti-apartheid champion Helen Suzman. Joffe was praised by key people in his business life on screen, such as Mpumi Madisa, CEO of Bidvest, and Joffe’s close friend former Investec CEO Stephen Koseff.

Investec provided the initial finance in Bidvest and took an equity stake. Koseff still chairs Bidcorp, which includes the food services business and has a more international footprint than the Bidvest mothership.

Madisa did not have much excuse not to be at the occasion in person as the Bidvest offices are in Melrose Arch, just a stone’s throw from the Sandton Convention Centre where the ceremony was held. But Koseff was sharing his praises from Sydney, Australia, where he now lives.

There was the usual video going through the highlights of Joffe’s life ― those cringeworthy pictures of him in 1980s big hair and big spectacles. He shared that, like so many Jewish mothers, his wanted him to be a doctor. He gave that up within a week after he had to dissect a frog and turned to accountancy. He was a natural. A natural with figures, that is ― he loathed the tedium of auditing.

But what Joffe did learn from auditing was that there were hidden gems in unglamorous businesses. Many of the underlying Bidvest group operations are spectacularly dull, such as toilet cleaning services, Sellotape and catering supplies.

The common denominator was that he bought businesses that were underperforming but yet had solid operational management as family businesses. He told a book on entrepreneurship produced by the Gordon Institute of Business Science (Gibs) that he has never bought showroom businesses at showroom prices. As no-one else wants to buy these companies there is rarely a bidding war.

Joffe was never a command and control CEO. He liked to have a say in how a business was structured, how it defined itself and its point of focus. But after that Bidvest has always had a decentralised approach, with individual managers running their business units as they see fit.

In spite of his accounting background Joffe pays little attention to balance sheets. They do not say much about the operations that will deliver most long-term value, he told Lynden Wright in the Gibs book. He dismisses a balance sheet as a summarised version of the facts that apply at a particular moment in time.

A far more important issue for Joffe is people and how people are managed in a business. His skill has proved to be assessing people, making sure the right ones are in place and that they are being managed in the right way.

“If you could find a way of precisely quantifying and accurately describing the value of people at a specific moment in time you would have an entirely new way of compiling a balance sheet,” he said. “This still has to be invented, of course, so what you are left with is your ability to judge people and what they can do for the business.”

Building the Bidvest conglomerate in the 1990s and early 2000s was certainly against the prevailing fashion of unbundling. In an interview, Anglovaal patriarch Basil Hersov once complained to me that he did not understand why there was such pressure for his mining and industrial conglomerate to disband while Bidvest was still expanding.

Anglovaal was indeed put under pressure to split its mining and industrial businesses, and it later had to split its industrial interests between consumer-focused AVI and engineering and construction-based Aveng. It lost many of the benefits of a strong centre that could see its subsidiaries through hard times.

But the rest of the South African mining and industrial mammoths went through the same process, starting with Gencor, which unbundled Engen and Sappi in 1993. Anglo American resisted unbundling but was eventually forced to shed its banking and insurance and industrial businesses ― even its core gold mines.

At the same time Joffe was reeling in some big fish, such as the Rennies freight and travel business (later the basis of Bidvest Bank), McCarthy, the second-largest motor distributor, and the Waltons stationery chain — not to mention even bigger fish overseas such as Booker Foodservice. Often these conglomerates trade at a discount to net asset value, but there was a Joffe premium for Bidvest.

Consider other conglomerates such as African Rainbow Capital (ARC) and KAP, both of which struggled to reduce the discount to net asset value (NAV). ARC had to delist in the end. In any case, as Bidvest owned 100% of its subsidiaries the NAV was just a matter of opinion.

• Cranston, a veteran financial journalist, is author of ‘The Mavericks’, a new book about South African fund management. His second book, a history of the Investec Group, will be published next year.

Business Day