Private equity firm TDR Capital LLP has taken control of supermarket chain Asda after Zuber Issa split with brother and co-owner Moshin Issa and sold off his stake in the company.
TDR Capital now owns 67.5% of Asda, while Moshin has 22.5% and Walmart the other 10%. The deal is expected to be finalized in the third quarter of this year.
Asda is seeking a permanent chief executive to help usher in and shepherd the new era under TDR. The company recently completed a refinance of more than £3.2bn of its debt and had its corporate rating from Moody’s upgraded from B1 to B2. Fitch Ratings also upgraded its status from stable to positive.
Asda’s net debt is still at £3.8bn, and officials say they are “committed to further deleveraging.” However, the spin was all positive from the new top stakeholder.
“By combining our investment and sector expertise with Asda’s heritage of delivering value for customers, we have already made significant progress in transforming Asda,” Gary Lindsay and Tom Mitchell, Managing Partners of TDR Capital, said. “As majority owners, we will continue to work closely with the Asda management team and colleagues across the business to support the ambitious strategy, which we believe is the right one to continue to move Asda forward.”
That strategy includes a lean in further to digital and convenience.
“We have added a scale convenience business, grown Asda’s store footprint from 623 to 1,200 stores and food-to-go sites, and launched a hugely successful loyalty app, which now has six million active customers, accounting for around half of total sales. We remain focused on investing in Asda’s stores and online, as well as its colleagues through the highest pay in the traditional supermarket sector, to drive sustainable, long-term growth.”
Mohsin Issa downplayed the impact of the shift in control and focussed on the future.
“As a shareholder group, we are excited about the growth journey we are on,” he said. “Asda is an iconic British brand and we are committed to setting it up for long-term success and delivering great value for customers across the UK. To that end, I am incredibly proud of the investments we have already made in transforming the Asda business, including the launch of the new Asda Express convenience format, the Asda Rewards customer loyalty scheme and the £800m investment in a best in class IT infrastructure to bring new data and insight capabilities.”
He also addressed his brother’s split from the company.
“I also want to add my personal support and best wishes for Zuber’s plans as we continue our successful family partnership, working as partners on our personal co-investments, family office philanthropy and Issa Foundation projects.”
Zuber Issa talked about why he is stepping away from the business.
“Since Mohsin and I, alongside TDR, took ownership of Asda, we have driven a period of significant investment and entrepreneurial growth activity,” he said. “With the divestment of my Asda shares, I will now turn my attention towards leading and managing the remaining EG UK forecourt sites that I have personally acquired, and spend more time on my charitable endeavours.”
Part of that future for Asda is continuing to grow its EG UK and Co-op sites on petrol fuel stations, where it has invested a staggering £3.5bn. Among the initiatives within that strategy are a £150m investment in retail pay and some 116 convenience outlets it acquired from Co-op.
Asda’s full-year results from 2023 included a 24% increase in adjusted EBITDA after rent to £1.078bn. Total sales increased by 7.1% to £21.9bn.
