Mauritian investor buys Edgars Zimbabwe from SA’s Edcon

Zimbabwe Edgars

Edcon, the struggling South African retail group, is selling its stake in Edgars Zimbabwe to Mauritian investment management firm SSCG Africa Holdings.

Saved from collapse last year after a R2.7bn facility with lenders, Edcon has been looking to sell some of its non-core businesses to stay afloat.

Under the transaction, SSCG will buy 100% of Bellfield, the investment vehicle through which Edcon held 41.07% of Edgars. The Competition and Tariff Commission approved the takeover “without conditions”.

“As a result of the acquisition, SSCG will have a direct control in Edgars,” the CTC said in a notice. 

Edgars Zimbabwe’s split from the South African group had already taken a big step in March, when the two entities agreed on the US$1.5 million acquisition, by Edgars, of trademarks to brands owned by Edcon.

In exchange, Edcon increased its stake in Edgars from 38% to 41%. It is that stake that will now be taken over by SSCG.

Before Edgars took over the brands – which include Jet – the Zimbabwe company was paying annual franchise fees to Edcon. However, Edcon, by 2018, was owed US$2.1 million in outstanding fees.

Edgars is the largest clothing retailer, with 25 branches located throughout the country. It also controls 25 Jet Stores, the Club micro-finance unit as well as Carousel, the garment manufacturing factory based in Bulawayo.

This is not SSCG’s first investment in Zimbabwe.

In 2017, the firm took up a stake in Vast Resources, after extending US$8 million to the miner; US$4 million each as payment for shares and as a loan. In 2018, SSCG also helped shore up troubled airline fastjet with a US$2 million loan facility. SSCG also has an interest in micro-finance Untu Capital.

Like most other retailers in the country, Edgars is currently under pressure from a collapse in consumer spending. In July, CEO Linda Masterson told shareholders that the number of unit sales sold in the month of May was 16%. June’s turnover growth was trending above 200% over the prior year, until the announcement of new currency reforms that month, after which growth slowed to 100%.

Sales were already down; in the traditionally busy festive period of December, sales fell 37% at Edgars and 33% at Jet.