Asda’s billionaire brothers face billions of pounds of debt – and talks of strained ties
Luke Barr
10 min read
Zuber (left) and Mohsin Issa have up until now built their £5bn fortune together, in unison - Jon Super
Towering 95ft high and overlooking the streets of Blackburn will soon be a £5m mosque that serves as a grand monument to the lucrative partnership between Mohsin and Zuber Issa. Family, faith and finance are forged together in steel.
The Lancastrian landmark will represent not only the billionaire brothers’ dizzying rise to wealth and success but more importantly demonstrate their commitment to the Muslim faith.
In the words of a close family member, “Islam is always at the forefront” of everything the brothers do, who up until now have built their £5bn fortune together, in unison.
However, recent talk across the retail sector points to a rift between Mohsin and Zuber, with tensions said to be running high over a family matter.
Crucially, this alleged strain comes at a time of unprecedented financial pressure for the Asda owners, as billions of pounds of debt bear down on their empire like never before amid higher interest rates.
Their success has already driven a geographic wedge between the brothers as Mohsin runs Asda’s day-to-day operations from Leeds, while Zuber oversees EG Group’s petrol forecourts empire from Blackburn. This arrangement, albeit planned, has helped fuel talk of a rift.
“All is not harmonious within the family which is a shame,” says one industry insider.
On Friday, a source close to the brothers insisted: “Blood is thicker than water and they will always have each other’s backs.”
Zuber Issa oversees EG Group’s petrol forecourts empire from Blackburn - Jon Super
The Issas’ relationship has been at the heart of their business success. Zuber’s wife Asma gave a glimpse into the brothers’ intertwined lives during a Radio 4 interview in 2021.
“They actually hate being dubbed the billionaire brothers. They are very different. Zuber is someone who’s very easily approachable – he’s kinder. Mohsin is very work-orientated.”
EG Group’s commercial director Ilyas Munshi added: “Zuber is a visionary, he likes to build things. Mohsin, on the other hand, is more into the operational management, the details, how do we make it successful?”
Despite their contrasting personalities, Asma stressed that Islam is important to both of them, who grew up in a terraced Blackburn house with their parents, immigrants from Gujarat, India.
“I don’t think anything will ever surpass faith,” said Asma. “From the moment they wake up to the nighttime, they never miss a prayer. We have five prayers a day – Islam is always at the forefront.”
This has not only led to the creation of a £5m mosque, but the brothers also donate 2.5pc of their wealth to charity through the Issa Foundation, which supports hospitals and provides free breakfasts for school children in and around Blackburn.
The new mosque and community facility are being built on Preston New Road, Blackburn by the Issa Foundation - Lancashire Telegraph
During the BBC interview, Asma explained how it was Zuber who kickstarted the Blackburn-based brothers’ petrol empire, which started with an initial forecourt in Bury 22 years ago and was turbocharged after TDR bought a 50pc stake in EG Group in 2015.
“Zuber always wanted to do his own thing,” she said. “He was really interested in retail.
“I don’t know what he saw in the petrol industry. Every Saturday, Zuber would visit all of the sites.
“A few years down the line when it got to a stage where Zuber couldn’t really handle everything himself, that’s when he approached his brothers and said ‘one of you, come and give me a hand’, and that’s when Mohsin came in.”
It wasn’t long before the pair were expanding their sprawling empire across the globe, snapping up thousands of forecourts and turning them into destinations where you could buy food as well as fill up your tank.
This model led to them being crowned Forecourt Traders of the Year in 2011, sparking a £3,000 winners’ cheque.
This is a far cry from the £5bn that the pair are now worth, which has allowed them to create a complex of five mansions on a leafy street in Blackburn, while also snapping up a £25m property in Knightsbridge, London.
Trappings of wealth have led to the purchase of two Bombardier private jets, while their properties are thought to have access to a pool, a private prayer room and a cinema.
Their commitment to the community also previously led to them drawing up plans for Europe’s biggest Muslim cemetery in Blackburn, although these were later withdrawn.
The brothers’ property arm also recently applied to build 603,000sq ft of warehouse space near Blackburn.
Speaking to the FT in 2018, Zuber said: “People are always asking when will we move to London or Manchester. But the quality of life here is great. A lot of people do a few years in London and then come to the North West. They want to raise a family and have less pressure.”
But since acquiring Leeds-based Asda in a debt-fuelled £6.8bn deal in 2021, the Issas’ horizons have inevitably broadened as new doors have opened to them, and the scrutiny they face intensified.
At a disastrous select committee hearing earlier this year, Mohsin told MPs that he was a “deeply private person” who was uncomfortable in public.
However, as a former senior Asda employee says, maintaining this privacy will prove an impossible task while running one of the largest retail companies in the country.
“Chief executives in the retail sector are like celebrities,” he says. “They need to make themselves available for interviews and be public-facing.
“It is very hard to live under a rock as a supermarket boss. It is that important to peoples’ lives – which supermarket they shop in is how they define themselves.”
MPs have continued to ask questions about the Issa brothers’ finances and the state of their empire. Last week, Mohsin sought to ease concerns over the company’s complex structure by writing to business and trade committee chair Liam Byrne MP to deny basing companies offshore in Jersey for tax purposes.
Regardless, the financial pressures they face in a world of higher interest rates are undeniable. Last week they sold off their network of 200 KFC franchises to pay down debts.
As one City analyst says: “Next year is posing more than less challenges for Asda.”
Much of this stems from the $5.7bn (£4.5bn) of debt attached to EG Group, which will continue to wreak financial trouble as long as interest rates remain high.
However, what has not yet fully been accounted for is the higher business rates bill that Asda faces across its 600-plus stores next April.
That is in addition to the anticipated rise in labour costs caused by the Government’s recent increase in the national living wage, which will impact Asda’s 140,000-strong workforce.
This hike in costs comes against the backdrop of falling retail sales, as Asda continues to lose market share to discounters Aldi and Lidl.
All of which will pose a threat to a balance sheet already under pressure.
“If you look at Asda’s performance, only Iceland has got a worse sales dynamic in the UK,” says a City analyst. “They are losing volume, they have a lot of debt and costs are going up.
“This is a time when you want everyone facing the same direction and galvanised.”
Their signature debt-fuelled takeovers are no longer on the menu. Instead the brothers are scrambling to reduce costs by selling off businesses and using the proceeds to reduce their overall borrowing.
But speculation of a rift has led some to suggest that the pair are unable to be in the same room together, with a senior industry figure going as far as to describe the fallout as potentially “irreparable”.
This interpretation has been rejected by a source close to the Issas, who says that Mohsin and Zuber meet regularly and speak every day.
They noted that the pair visited operations overseas together earlier this month on the same flight, while also hosting EG Group’s quarterly results in the same room on 29 November in Blackburn.
Yet, regardless of the state of their relationship, a retail executive at a rival supermarket chain has pinned Asda’s problems on Mohsin’s power at the top. The novice grocer has held control ever since the company’s search for a new chief executive failed to bear fruit last year.
The executive says that Asda, which has been linked to departing Tesco boss Jason Tarry, will struggle to find someone to run the business as long as Mohsin is at the helm.
These views are echoed by another industry source: “Mohsin is not a backseat driver, he’s sitting in the passenger seat. They need to figure out Mohsin’s role.
“Does he become executive chair and they bring in a managing director? Or can this business not recruit a chief executive while he’s there? That itself isn’t helpful to the clarity or direction of the senior management team, never mind the recruitment of talent.
“There may need to be a fundamental change at the top of Asda if they are to entice new top management.”
A source close to Asda said: “The process to identify a long-term CEO of Asda remains active. In the meantime, Mohsin continues to lead Asda, using his extensive experience of transforming businesses. He is supported by an exceptionally strong senior team to lead the business day-to-day.”
Similar questions may be raised next week when Mohsin is thrust into the spotlight once again when he will be forced into a fresh grilling before the business and trade committee over the role of private equity in the retail sector.
He will hope to improve on his last performance when his responses prompted anger and even led to accusations of contempt from MPs who claimed to have been misled. Mohsin has denied the allegations.
Mohsin Issa will be thrust into the spotlight when he again answers questions from MPs - Jon Super
Clive Black, an analyst at Shore Capital, has followed the pair’s journey closely.
“The Issa brothers have been one of the most formidable family business pairings in British modern times,” he says.
“What they have very quietly done from a petrol garage in Bury is build a global empire. And that is where I have got incredible admiration for them. They are risk-takers and I think they have been exceptionally fortunate to have TDR as their partner.
“Where I am wholly impressed with the Issas, is that they have embraced debt capital markets.
“These guys built a business, made themselves billionaires and struck an incredible deal for Asda. It was genius in terms of identifying opportunities and understanding debt markets.”
However, even Black admits they have been caught out by the rise in interest rates over the past 18 months: “They clearly didn’t anticipate that interest rates would rise as steeply and as quickly as they did. And that has meant they have had to dispose of businesses. I imagine that has been quite stressful, it’s a different context to go-go growth.”
Whether the stresses of business have since combined with family matters to boil over into an irreparable fallout is a question only the brothers can answer. They declined to comment.
