About a year ago, South African entrepreneur Braam van Huyssteen sold a significant minority stake in his sports and lifestyle shoe retail business, Tekkie Town, to emerging markets private equity firm Actis for US$65m.
During the recent EY Strategic Growth Forum Africa, Van Huyssteen explained how he gradually built the company without any debt and by investing everything back into the business.
After finishing university and completing his military training, Van Huyssteen got involved in a family retail outlet in the coastal town of Mossel Bay. He later opened a second sports store in nearby George. A pivotal point was when he went to visit a local Caterpillar footwear representative, with the idea of buying about 100 pairs of shoes. However, after seeing the inventory he made an impulsive offer to buy 12,000 pairs – all the stock, at a cost of 1.2m South African rands. He and his partner managed to quickly shift them, after which they dabbled in footwear wholesale for a while. But Van Huyssteen knew they had to go into the retail business. In June 2001 the first Tekkie Town was launched outside Cape Town, and today there are close to 300 outlets.
“I had enough money to open one small shop. Then I worked in that shop for ten years and I had enough money to open a second shop. Then I had enough money to open a third shop, and now we open 30 shops a year. That’s how we created our own foundations/funding,” he explains.
“For 15 years we took every cent we made and we opened shops… So I never owned one stock on the stock exchange; I pretty much didn’t buy fancy cars; I didn’t buy fancy homes, aeroplanes, boats, all those things… If you’ve got a good foundation, you will get all those things and much more at the end.”
In the beginning there also weren’t any ambitions to one day sell part of the business to a private equity firm. “I think when you start out, it is purely [because] you have to have a job and you want to survive. And I think also the fear of failure is the other thing that drives you.”
Van Huyssteen, who is a judge of the EY Southern Africa World Entrepreneur Award (and a previous winner himself) says there are two attributes common to most successful entrepreneurs he has come across – they “started out with nothing”, and have “an immense work ethic”.
“So in short, the harder you work, like Gary Player said, the luckier you will get.”
Private equity investment
At the time of the acquisition, Actis said Tekkie Town fits into its “consumer-centric approach, as a differentiated retail proposition in a high-growth sector, underpinned by the demands of brand and lifestyle-conscious African middle class consumers.” It intends to drive Tekkie Town’s expansion into the rest of the continent.
According to Van Huyssteen, the time was ripe to take some money off the table. “I thought it would just make sense to take some eggs out of the basket, and put it in some other haven.”
He describes the private equity experience as largely positive, saying Actis helped to streamline the business. It also gave Tekkie Town more credibility and these days there are more investor interest than ever. “No one wants to date the girl that doesn’t have a date, everyone wants to date the girl who already has a date.”
But not much has changed at Tekkie Town. In fact, Van Huyssteen, who is now executive chairman and still the company’s biggest individual shareholder, says he probably works harder than before. “It’s okay if you disappoint yourself, but you don’t want to disappoint people that have put their trust and investment into your business.”