As a young man, South African businessman Christo Wiese cut his teeth at Pep Stores. Over the years he built a mighty empire, which included Shoprite and a number of other enterprises. His recipe for success: an endless love for cutting deals, a fearless appetite for risk and a keen eye for a bargain. In this extract from Christo Wiese: Risk and Riches, business journalist and writer TJ Strydom tells the story of Wiese’s stint as diamond mine owner in the late seventies.

[The 1976 Soweto uprising] pummelled investor confidence. But it also created opportunities. “During the Soweto uprising, I bought a business from someone who’d given up on South Africa,” says Christo Wiese. It was a bargain, he adds.

The business wasn’t a little café on the corner: it was a diamond mine.

For those who think that only De Beers is allowed to own such mines, Wiese says: “That’s a fallacy. Anybody can own a diamond mine.” The business was called Octha Diamonds and the mine was on the banks of the Orange River, about 80 kilometres from where it meets the Atlantic Ocean. The operation was initially developed in the 1930s by Otto Thaning, an adventurer who had left Europe for Africa. Thaning had a daredevil streak in him and loved aeroplanes, suffering injuries on more than one occasion on his pioneering flights. He was later a Danish diplomat in South Africa.

When Thaning passed away, his son was not interested in such a substantial South African investment. “He gave an attractive option on the mine to a 22-year-old articled clerk, Johan de Villiers, who had only R400,” says Wiese. De Villiers made an offer nevertheless, but it was rejected at around 16:30 on a Monday afternoon. He then approached Wiese and asked him to come in as a partner. This was just the opportunity Wiese was waiting for. He had long had a fascination with gems, especially as he came from Upington. The town has always suffered from a bit of diamond fever, he says. By 08:45 the next morning, the deal was sealed.

“I risked everything to buy it with him.”

Moustaches, bell-bottoms and broad-collared shirts might have been popular in the 1970s, but it was the decade’s other big trend that gave the diamond trade a boost: inflation. Before 1973 a barrel of crude oil traded at around US$3. But during that fateful year, the Arab countries of the Middle East took serious offence at the West’s support for Israel in the Yom Kippur War. These large oil producers decide to close the taps. Within a year the price of crude oil quadrupled, causing unprecedented price increases worldwide. Not only did transport costs spike, but most products became noticeably more expensive. And the oil price kept climbing, reaching $40 per barrel by the end of the decade.

High inflation gnaws away at purchasing power year after year, motivating investors to look for asset classes that will retain value. The result in the 1970s was that billions of dollars flooded into gold and diamonds after the oil price shock. Wiese’s timing was impeccable.

He also did his homework. He set out to learn from the experts in Antwerp, the hub of the diamond industry where stones have been traded, cut and polished for four centuries. He visited his mine three times a month. Sometimes he took Caro (his wife) along, flying out and making a weekend of it. Wiese and De Villiers set up offices in Antwerp and Zurich, and also had plans for New York and Sydney. Wiese also devised a strategy to turn the local market on its head, because he saw more opportunities than just those presented by the international market.

The Soweto riots poured cold water over affluent South Africans. Widespread fears that the country would go up in flames convinced Wiese that the rich would be nosing around for the best way to invest in highly movable assets. “A man carrying a handful of diamonds can leave everything and make a new start somewhere else,” he said. So he started Cape Town Diamond Investment Brokers.

And the money cascaded in. But greater powers were at work. The hunger for a proper asset of value attracted investors of the speculative sort, who pushed up prices to dizzying heights. “At the height of the 1980 diamond boom, I sensed the market was unhealthy and sold to Johan.” According to reports, Wiese received R5.8 million for his stake.

He sold in February. In August his partner hit a pothole (it sounds bad, but in diamond mining it’s a good thing), which yielded R30 million in diamonds. “He paid me out with ease.”

Two years later the diamond market collapsed and the company was liquidated. Wiese got out at just the right time.

TJ Strydom is a financial journalist who has worked for Beeld, The Times, Reuters and Sunday Times. Christo Wiese: Risk & Riches is an unauthorised biography of the South African billionaire who is the largest shareholder in Shoprite and who, for many years, controlled retail group Pepkor. Wiese lost a large part of his fortune when Steinhoff International’s share price collapsed late in 2017 due to what the company calls “accounting irregularities”. Publisher: Tafelberg. The book can be purchased here.