Inside TDR, the secretive — and powerful — investment consortium

A consortium of investors has just completed a £6.8 billion buy-out of one of the nation’s largest supermarket chains. But where did they come from?

This week UK-based entrepreneur brothers Mohsin and Zuber Issa found themselves at the helm of the UKs biggest leveraged takeover in more than a decade when they and secretive buyout firm TDR Capital completed the acquisition of Asda for £6.8 billion. 

Walmart, Asdas US parent company, will retain an equity investment in the business and seat on the board, with the Issa brothers and TDR Capital consortium taking a majority stake in the company.

According to information published by Business Report, Walmarts remaining minority stake in Asda is valued at £500 million, while TDR Capital reportedly paid just £780 million in cash for the supermarket chain. According to the report, £.7 billion was raised through selling debt while £1.7 billion was raised through the sale of Asda assets, including the sale of the supermarkets petrol stations to the Issa brothers EG Group. 

While it is common for private equity-backed takeovers to be funded in large parts by debt, the Asda deal is a somewhat extreme example, with just 12 per cent of the purchase price coming via fresh equity from the new owners,notes the Industry Insights report at Business Report. 

Concern was raised by a UK watchdog that the fuel sale valued at £750 million could lead to a rise in fuel prices at 36 locations across the UK. However, this was not enough to prevent the deal from going ahead. 

Mohsin and Zuber Issa, who grew a single petrol station into an investment empire

Structuring the deal this was is unusual, not to mention intricate. It also leaves Asda with over £3.4 billion in net debt, when previously it had zero external debts. The Issa brothers have reassured concerned parties that they are “putting in place a robust capital structure”, adding:

“We look forward to working with our Asda colleagues to build an even stronger, more differentiated retailer – including through the investment of more than £1bn in the next three years to further strengthen the business and its supply chain.”

Speaking to Business Report, Shore Capital retail analyst Clive Black expressed concerns. “The risk profile of Asda has undoubtedly gone up… They [the Issas] have bought Asda when supermarkets have got elevated sales and brighter general prospects as working from home and online groceries are probably here to stay. There is lots of money around and it is very cheap for risk-taking entrepreneurs and private equity but only time will tell whether they will look back and think that was a good thing to do.”

Time will indeed tell, but perhaps TDR’s track record will offer some insight. Let’s take a look.

To unlock this article, please subscribe. Benefits include:

  • 2 Magazines delivered to your door
  • Direct offers and benefits with luxury hotels, clubs, restaurants and handpicked brands
  • Invitations to a minimum of 4 member-only events each year
  • Paywalled content — access to exclusive online features only for members
  • 15% off selected brands online with Gentleman's Journal
  • Your own Clubhouse membership card to redeem all the perks
Clubhouse Membership

Clubhouse Membership

Buy Now

Further Reading