How a teacher, two accountants turned Cape Town workers into millionaires - CNBC Africa

How a teacher, two accountants turned Cape Town workers into millionaires

Special Report

by Jay Caboz 0

*This article first appeared in Forbes Africa. Subscribe today by emailing Lieria Boshoff:[email protected] or visit

It was a gloomy winter’s day outside the domed Good Hope Centre in the heart of Cape Town. Table Mountain peeped through the clouds and a slight drizzle pattered gently against the concrete roof. It was July 18, 1998, the day that saw the money of poor people stand shoulder-to-shoulder with the rich. A day the dream of turning $840,000 into $628 million took root.

This was the moment when Brimstone Investments listed on Africa’s largest bourse the Johannesburg Stock Exchange (JSE). It carried the hope of small shop owners, fishermen and teachers who had put their life savings on the line.

“It was early days at the Good Hope Centre, which is at the foot of District Six, what was then called the Fruit and Veg Market. We had this view we were taking the people to a different kind of market, the market of high finance,” chuckles Fred Robertson, executive chairman of Brimstone Investments. 

Many of the thousand shareholders that gathered ran the same streets as Robertson. The future entrepreneur and millionaire sold newspapers, apples and popcorn in cinemas in District Six. The company’s choice of District Six was, as the launch pad for wealth for the people, no accident – rather an unspoken statement. In the 1970s, the apartheid authorities moved Robertson and 60,000 of his neighbors to make way for white residents.

“You must remember there were forced removals across the country, not only in District Six. But we were thrown across this piece of wasteland called the Cape Flats. Families were taken apart. Friends and neighbors were all thrown. We were a family of nine children. My sisters were in different townships. Our family started disintegrating at the time,” says Robertson.

All this was a distant, if painful, memory as the shareholders in the Good Hope Centre stood nervously staring at two large computer screens as they flickered into life. Most knew little about the shares their money had bought. They were a cross section from the margins of Cape Town: the sort of people who walked to work with little money to spare.

This listing was also proof of the promises from Robertson, a former teacher, and his partners Mustaq Brey, a self-taught chartered account from Wynberg, and Lawrie Brozin, another chartered accountant who joined the company from his family business in Illovo, Johannesburg; three men, three worlds, three religions; one fear shared with their shareholders – a loss.

“We are talking about a community that was previously disadvantaged that didn’t know about stocks. We listed at R4 ($1.12) and came off at about R6 ($1.68),” says Brey.

“Life was good then, hey?” laughs Brozin. 

Since that soggy day in July 1998, the investment company has gone from strength to strength. Brimstone these days claims assets worth $628 million, with an intrinsic net asset value (INAV) of R17,09 ($1.48 in 2015)  a share, a far cry from R4 ($1.12 in 1994)  on day one at the JSE.

After 20 years of investment, the group employs around 3,300 and has 16,000 subsidiaries. Its associates are among the biggest names in Africa: Life Healthcare, Oceana, Sea Harvest, Lion of Africa Insurance, Old Mutual, Nedbank, Tiger Brands, Grindrod Limited, The Scientific Group, House of Monatic, Taste Holdings, Afena Capital and Rex Trueform.

Chili Poppers
The Brimstone trio reflect on leaner times in their humble offices at the back of Newlands cricket ground on a brighter day. Around the boardroom table the mood is easy. In between questions, at least one of the three will reach out to snap up a steaming spring roll or a chili popper, made by Brey’s sister Bibi.

“Your sister is the best cook, I am telling you now,” says Brozin to Brey.

Bibi’s spicy titbits are a small reminder of how everything, as Leonardo da Vinci said, is connected to everything else. In 1994, Bibi, along with her chili poppers, was at the first Brimstone shareholder meeting in the small Newlands Grounds South Room, a stone’s throw from this boardroom.

“We called in a whole lot of people together and explained to them what we wanted to do. The meals we ordered where from Bibi, she then brought us a bill the next morning,” says Robertson.

“For R5,000 ($1,400),” says Brey, ever the accountant.

“And we then gave her a share certificate,” says Robertson. 

“I then said ‘you owe me another R12,500 ($3,503)’. She said ‘I owe you money?’ And I said ‘yes’. She ended up paying the extra money and landed up with 5,000 shares,” says Brey.

“Six thousand seven hundred and fifty shares [in total],” corrects Robertson.

Back in 1994, it wasn’t just the chilies that were inviting. In that year, the shareholders spotted their first hot deal. They called it the Oceana deal: a 9.73% stake in Oceana Group, a collection of operating subsidiaries in the fishing and cold storage industries along South Africa’s west coast.

“The bank told us they would give us a loan of R4 million ($1.1 million). We had to raise another R3 million ($842,000) in six weeks. We went door to door. I even remember organizing a bond on the one shareholders house to get some money,” says Brey.

“At the time you were starting a company. It’s not like you were buying a company. It was an idea. You were backing guys,” says Brozin.

By 1995, the deal was done; the first drop in an ocean of investments that was to make more than a few waves. Word spread to the ear of former head of state Nelson Mandela.

“Mandela was one of our first shareholders. He paid for shares, like everybody else paid for shares. He saw it in the newspaper and then called us to the presidency and said he also would like to invest, like everybody else. And we said ‘yes of course,’” says Robertson.

“He bought 240,000 shares with a cheque of R300,000 ($85,000),” says Brey.

Foul Weather On The Horizon
It was not all fair winds and flowing seas. Storm clouds loomed over the horizon as foul weather threatened to sink Brimstone.

“In 1995/96 it was the start of a huge boom in the stock market. South Africa was in a fantastic space. Everyone was listing. We used my house as an office in Illovo, a study at the bottom. We had cigars and whiskey. It was just such a crazy time. We became quite substantial after about a year because the market carried us. Then the music stopped,” says Brozin.

The financial storm hit in August 1997.

“The world financial markets were in turmoil. At the listing time it had been up to R6 ($1.68). Our INAV, if you did a calculation of what our values were, it was then R2.50 ($0.35) at that stage,” says Brey.

By 1998, Brimstone’s share price almost hit the seabed.

“Then the vultures came out and said they wanted to buy us out. They told us we could make R150 million… A financial group in Johannesburg came to us and said why don’t we delist Brimstone, buy the shareholders out at current market price. Buy them out at a rand. Sell all the assets and then make R1.50 profit,” says Brey.

“But we said we don’t want to leave Cape Town. We’ve taken money from the people from the [Cape] flats; we’d have had to run out of Cape Town if word got out that we’d do something like that. It was unethical. What we then decided to do was sell off all liquid or listed stocks, the easily sellable stuff. Turn that R1.50 and give back capital of R1.50 to our shareholders. Our shareholders liked it, but the market didn’t. Our price went down to about 20 cents ($0.03) in October 2001,” he says.

“The lowest of the low our share was 18 cents,” says Brozin.

In those days, you couldn’t even buy chewing gum for that.

Brimstone weathered the storm. In 2003, it doubled its stake in Sea Harvest to 61.44%, one of the largest hake producers along the west coast – its gross value in 2014 was at just over R557 million ($52 million). The waters appeared to have calmed and the shares rose with acquisitions into Old Mutual (now at $22.4 million), Nedbank (now at $47.5 million), Life Healthcare (now at $202 million) and Oceana (now at $162 million).

Five years later, another whirlwind hit. This time it was the 2008 global financial crisis, in which the whole world got soaked. Companies floundered after the United States (US) property bubble burst. Sub-prime mortgage-backed securities on US property price estimates crashed.  The knock on effect hit Cape Town with a vengeance. Brimstone’s headline earnings went from just over R752 million ($69.9 million) in 2007, to a headline loss of about R77 million ($7.1 million) in 2008.


“Looking back over the past year, it was a period that brought some extraordinary challenges. The turbulent and perhaps up to this point, unprecedented deterioration of the global financial market, has and will for the foreseeable future continue to impact on economies, businesses and ordinary people across the developed and developing world. Like many other companies, Brimstone has not escaped the effects of the negative market,” wrote Jakes Gerwel, former Director-General of the Presidency when Mandela was in office and the Non-Executive Chairman of Brimstone in 2008.

By the end of 2008, Brimstone’s net asset value had declined to $204 million, an erosion of 7.7%.

Turning Point – Life Healthcare
Joy came in the morning. To the rescue was a lifesaver in more ways than just the name. The Life Healthcare deal, struck in 2005, matured in 2010 just in time to save the company.

“Life Healthcare issued almost double equity on our shares. In June 2010, we unbundled Life Healthcare and created significant wealth for our shareholders,” says Robertson.

The unbundling threw off the recession and stabilided Brimstone’s name in the investment business. It was a good time to be in the South African private healthcare market with a growing and aging middle class and a cash strapped public sector healthcare system.

These days, Brimstone’s 5.04% share in the private hospital operator is valued at over $202 million. It’s an important part of the $628-million company. Brimstone’s share price now sits at R17 per share, a far cry from the dark days of 2008 and 18 cents.

So, does the trio think that their shares are undervalued or overpriced on the JSE?

“We’ve always been selling at a discount. We trade at about a 20 per cent discount. You will see most investment holding companies will trade at this,” says Robertson.

In the last year, the company has been busy. It sold its shares in diagnostics group, The Scientific Group, to Ascendis in a deal worth R284 million ($26.7 million). It also completed a R1.6 billion ($151 million) transaction giving it an 8.4% share of Grindrod, the South African-based freight holdings company.

“Over the past 10 years, Brimstone has delivered an annual total return of over 40 per cent to investors. Over the past year, Brimstone’s exposure to the fishing industry in particular, through Oceana Group and Sea Harvest, as well as its investment in Tiger Brands, have boosted its performance. The underlying assets offer investors the opportunity to get exposure to unlisted companies with good earnings growth. As the company is relatively closely held by investors, with a small free float, liquidity is an issue for new entrants,” says Mia Kruger, director, equity analyst and portfolio manager at Kruger International.

“Grindrod has been in existence in Africa for over 100 years. The infrastructure sector which we are busy with at the moment is exceptional. Grindrod, in Mozambique, is doing well with port and rail,” says Brey.

Other investments include the purchase of a R125 million ($11.7 million) fishing trawler from Norway called The Harvest Atlantic Peace that works for Sea Harvest out of Saldanha Bay, 120 kilometers north of Cape Town.

“She is, touch wood, fishing absolutely phenomenally. [Sea Harvest] certainly is one of the biggest economic drivers along the west coast. I think people underestimate the importance of Sea Harvest. In Saldanha, we must be the biggest consumers of electricity; pay the most taxes; pay the most rates and employ the most people. Again, the knock-on effect from that is an economic driver along there and it keeps hundreds of small shops open,” says Robertson.

A study by the University of Cape Town concluded that this single business was the largest economic driver along the West Coast of South Africa. It employs 2,800 people with the majority 77% female.

Largest AGM In Africa
Brimstone’s ticket to billions lies in the hands of hundreds of shareholder’s homes across Cape Town. Most of them are working people; one reason why Brimstone holds its AGMs after hours.

“In the early days, we had one shareholders meeting in the day. People came up to us and said ‘are you going to pay me for my day I am not going to work?’ We’ve learned that part of setting up Brimstone and developing Brimstone was we had a new wave of shareholders, who had never invested in the market before. Shareholders for the first time got shares in a listed company. We had to educate them. I think more of this should have been done in the country to be honest,” says Brey.

“I’ve learned from Brimstone that one takes for granted that you have a stockbroker, you go and buy a share and all is well. But that isn’t the way life works for the shareholder we have. They don’t know what a share is; they don’t know what a share certificate is; they don’t know what a CSDP [Competitive Supplier Development Programme] is. It’s very confusing. We’ve been very accommodating and I don’t think there is a company today that actually manages that process for our shareholders,” says Brozin.

“Three hundred people come to our AGMs. It’s one of the biggest in the country. I think you can’t go on doing business as usual, offered to us in our new democracy. You couldn’t do this before,” says Robertson.

Empowering the previously disadvantaged remains a core aspect to Brimstone’s success.

“They are saying today one percent of the world’s population owns half of the world’s wealth. That’s why we have some of the issues we have got today,” says Brozin.

“People say [black economic empowerment (BEE)] is dead. I don’t believe that. I believe it’s very much alive. We are going to have to do much more of it if we are going to get this country into the right economic shape that it should be in… We are going to have to rethink in this country for its own good how we’re going to do BEE going forward. It’s going to have to cascade more and go broader.” 

When it comes to Africa investing in Africa, they say it’s simple.

“The people of Africa should have more stakes in those businesses than what they have ever had before. That also counts for any region you invest in. You can’t go in and just do business and not employ the people there and not leave the profits behind. You have to leave the country in a better place than what you started in,” says Robertson.

Almost 20 years to the day, it’s a fair walk on a gusty summer’s day as the trio trudge into the wind up Signal Hill. A former teacher and two accountants, who turned an idea into an investment company, look down the valley beneath Table Mountain. In the hazy distance is District Six, the former home of Robertson. It’s one of the only parts of Cape Town that has been left fallow. This is land Robertson and his 60,000 neighbors are claiming back.

“It was our home after all,” says Robertson.

As the sea crashes onto the Cape Town shore, the sound is another reminder of yet another analogy that even the sturdiest vessels and plans can be wrecked by a freak storm. Just ask Brimstone.

*Currencies calculated according to Rand/Dollar exchange in relevant year

*This article first appeared in Forbes Africa. Subscribe today by emailing Lieria Boshoff:[email protected] or visit