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Johannesburg - Old Mutual’s private-equity unit bought a majority stake in MoreCorp, the largest South African golf- equipment retailer, as the investor bets demand from an expanding upper-middle class will overcome slowing economic growth.
The asset manager paid more than R300m ($20.7m) for a 70% stake in the company that controls more than 40% of the country’s golf market with The Pro Shop, World of Golf, and Playmoregolf outlets. MoreCorp also owns Cycle Lab, the nation’s largest cycling retailer, according to the investor.
Co-founder Darryl Egdes retains 20% and management owns 10%, the Old Mutual team said in an interview on Tuesday.
“Some people’s first instinct would be that golf is a dying game - we don’t believe that at all,” Jacci Myburgh, head of private equity, said by phone from Cape Town. “We see a lot of consumers transitioning into the upper-income lifestyle market over time who can take up golf.’’
Old Mutual bought out Rhys Hughes, who co-founded MoreCorp in 1976, because high-end consumer businesses are less tarnished by the nation’s slow growth, Myburgh said. The investor plans to make a similar investment within a month to reach the halfway mark in spending from its R4bn Fund IV, he said.
MoreCorp will expand Cycle Lab by using the same large-store format used in its golf business, Investment Principal Farhad Khan said in the same interview. Two new 2 500-square- meter stores will open this week in Pretoria and Johannesburg, with Cape Town and Durban outlets to follow within two years, he said.
