Chris BishopBy Chris Bishop|April 14, 2022|20 Minutes|In Billionaire Today

Billionaire Tomorrow

Mayhem making millions for Mandela and Makkie

If ever there was an African title of the peoples’ investor, Fred Robertson, fighting out of Cape Town, would surely be a contender. For he has rolled with the punches for nearly 30 years in the investing game, through recession, high water and COVID-19; high water that has seen many heavyweights hit the canvas. The investor with whom Nelson Mandela trusted his hard-won savings.

The view from Fred Robertson’s deck outside his beach side home, in Cape Town, is as blue and beautiful as far as the eye can see. An ocean that is the source of many of his millions.

If you look the other way, to the sound of the wheeling, squealing seagulls you will see one of the most expensive pieces of real estate in Africa – the fruit of a quarter-of-a-century of shrewd investment by Robertson and his listed company Brimstone. An investment outfit founded with a bundle of notes and a cheque signed in a petrol station on the back of a clapped-out brown Audi that now has a market capitalisation of R1.7 billion (about $120 million) and assets of more than twice that in everything from insurance to fishing.

From his window, overlooking the well-heeled seafront suburbs of Bantry bay and Sea Point, can see a new generation of entrepreneurs on the rise. Robertson is a charismatic, avuncular, millionaire, with a robust sense of humour, who always wants people to do well.

“Every day, I see young people coming through all excited. I see in this area, Sea Point and Bantry Bay, young people; clubbing money together and putting up micro apartments,” he says.

“But they are always using leverage, they must be careful, you have got to watch the cash, you have got to watch the cash flow. Profit is not the be all and end all, it is the cashflow that is important.”

“They come and ask me what should they be doing. I say to them watch the cash flow and follow the money. I think they have to be bold, they should work together, with people that they like, people with integrity and get it moving. Don’t worry about size, in the beginning; it doesn’t matter how small it is you can grow it into a massive business.”

Yet, this is not a time for growing business in the face of COVID-19 that has forced Brimstone to retreat.

“It’s something I never thought I would see in my lifetime. As insurance companies we always do a risk analysis and we talked about a 50-year event; 75 year; 100 year or 200-year event even 1000-year event. I always thought to myself why we do this? But then we get smacked by this in the face,” he says.

“It’s been sad, were always look at the numbers of people dying but now the numbers have become names… and it is coming closer and closer and it’s terrifying. What can we do? We drove down Camps Bay, Sea Point…you know it’s usually buzzing with people and local tourists, international tourists, and it’s just dead. The restaurants are closing, how do you think about this restaurant here, he put his bond and his house to invest into the restaurant… just think about the set back that that single owner of a business, the set back of that whole family.” Robertson is unhappy with the way the banks handled the pandemic and wants an inquiry into it.

“I must tell you I don’t think the banks behaved very well last year. They closed down a whole lot of people, they were bolstering up their own balance sheets. Recently, I see the banks have been upgraded by Fitch., where last year they were downgraded. What does this mean? How come banks have been upgraded – it can only mean they are closing down on people who owe them money. They weren’t giving the economy enough oxygen to keep on going. So, we need more banks. When there are more banks there will be a more competitive environment.”

Brimstone has had to trim its assets cut back and has used the cash to pay off more than a billion Rand in debt. Accountant and CEO Mustaq Brey, who launched Brimstone more than a quarter of a century ago with Robertson and fellow bean counter Laurie Brozin, joked at the results presentation in March that Brimstone had gone to the gym and emerged fitter.

It meant Brimstone said goodbye, after 20 years, to the 100-year-old House of Monatic that it held dear. The maker of ties and Carducci suits has been hammered by cheap Chinese imports and changing tastes.

“No one wears ties anymore!” says Robertson as we share a laugh, “Not even priests on a Sunday!”

Another withdrawl came as close to the heart and likely more painful for Robertson. Lion Insurance was a brave new venture – an empowered company to take on a lucrative, competitive, industry in South Africa – Robertson entrusted people he had known for decades with the business. Sadly, for Brimstone, many of these same people made up insurance claims and pocketed the money. It ended up with Robertson angry and betrayed and a police investigation; I interviewed him at the time and he was none too pleased I can tell you.

“It was not just a fraud case it was also the wrong market segment, and the parastatals weren’t doing any repairs or maintenance. Power stations blowing up, trains derailing and all of those kinds of things. It was just the wrong market segment for them to be in. The municipalities are not fixing the roads and potholes showing up everywhere; and there again no repairs and maintenance. So, people would have motor claims and comes back knocking at Lions door,” he says.

“So, it was just best to take your bloody nose and get out of the way.  Business is like that sometimes you’ve got to know when to go in and when to get out. We’ve had some pretty good successes and we’ve had a few failures and we’ve looked at what we can learn from that. So that it, it isn’t about how many times you fail it’s about how many times you pick yourself up after falling down.”

Luckily for Brimstone was that it had solid investment in fishing companies Sea Harvest and Oceana.

“We’ve been fortunate that our cornerstone investments Sea Harvest and Oceana Fishing, have been operating throughout COVID. They closed for the Christmas holiday period but throughout that they were in fact were working full time. Both those companies had very good years, a lot of extra expenses due to COVID with the sanitation, the screening of people, the extra nurses we had to employ on site and those kinds of things. It’s happened, we had to bear those costs, but I think our executive team has been quite clever in switching the market products. There were more and more people going to buy food at the supermarkets, so our fish that went in via the supermarkets and our fresh fish got cut back because the restaurants were closed. We were fortunate because we were able to send fish to Europe,” says Robertson.

Another crisis survived on a very long journey that stretches back to more optimistic days for South Africa in the 1990s.

Robertson Brey and Brozin – the three wise men – saw political freedom ushered in with free elections on April 27 1994 and wanted to bring their people economic freedom on top. They wanted  teachers, mechanics, factory workers and council employees to become investors. The only problem was, they didn’t have much capital.

They decided to go to the very same people to gather up bundles of notes and cheques to make up that capital.

One of their first stops was to see an old friend at the Aden Service Station in Athlone in the Cape Flats. A film script writer could not have come with what transpired.
The man who owned the station was Makkie Isaacs who was in the thick of pumping petrol on a busy, sweaty, afternoon when Brey and Robertson called in their beat-up brown Audi. For Isaacs the petrol station was his life; his father, a vegetable hawker, saved for years to buy the land.

The two asked for R12,000. Isaacs was in the thick of pumping petrol and didn’t have much time. He wiped his hands and put his cheque book onto the boot of the Audi and wrote a cheque for R15,000 (about $1 050).

“I thought they were collecting for a mosque or a charity,” recalled Isaacs more than 20 years later. The two asked for an investment of R12000 – the cheque was written  for R15,000 (about 1050 US dollars).

“He wrote the cheque in a hurry because he wanted to serve petrol and we told him it was too much. He said, keep the rest because you guys are going to need it. I don’t know how this company is going to go, so you keep the rest for petrol money!” laughs Robertson. Isaacs became investor number seven in Brimstone and that money had increased in value 34-fold by 2017. To this day, Isaacs buys Brimstone shares every year.

Brimstone listed on the Johannesburg Stock Exchange in 1997 in the first flush of success and what Robertson calls days of whiskey and cigars. On the day of the listing the company set up a live TV link up with the bourse and the teachers, mechanics and petrol station owners turned investors back in Cape Town. On the first day, as often happens with a listing, the share price dipped.

“People I had known for years were coming up to me on that day and saying: Hey Fred! What are you doing with our money?”

Yet this show of bringing investment to the people had caught the attention of a man who once coined a quote that could have been made for Brimstone: “The greatest glory in living is not in falling, but in rising every time we fall.”

This quote came from the man who was running the country in 1997 who knew all about fighting adversity. One morning, President Nelson Mandela picked up the telephone and dialled Robertson.

“I had a personal relationship with Mandela. I suppose many say this about him, but when he came out of prison, a few weeks after that, before he went to hotels, he actually slept at my place. We always kept in touch and when I started Brimstone, he phoned us and said: ‘Fred you’ve got to come and see me there is something happening about an investment company,’” says Robertson.

“And off we went and he said he want to be in this company. I told him everybody has to pay for their shares, so he said he wants to pay for his own shares. He asked how much he could buy, he then took out his cheque  book and wrote us a cheque for R150 000 as an investment. So, he is one of our original investors!”

Investment is rarely smooth for Brimstone and by 1998 the company the share price was rock bottom and everyone’s money – including that of the head of state – was in peril. The share price dropped from R6 to 18 cents – not enough to buy a stick of chewing gum!

The financial crisis of the year before had hit Brimstone hard and in Robertson’s own words the vultures were circling. An offer of R150 million (about $8.6 million) was put forward to buy the three wise men out.

Robertson told me years later: “We had taken the money offthe people of the Cape Flats; we would have to flee Cape Town if we did something like that.”

The three persisted and in 2003 doubled their stake in Sea Harvest that was to prove their salvation in the eye of COVID-19 nearly 20 years later.

Yet this was merely respite rather than deliverance. In 2008, came the world financial crisis. By the end of a turbulent year Brimstone earnings had dropped from $69.9 million, in 2007, to a loss of $7.1 million. Luckily for Brimstone a deal struck in 2005 – with Life Healthcare – matured in 2010 allowing the company to reward its hard-pressed shareholders with dividends.

In many ways Robertson has come a lot further than his company. Born into apartheid, where his prospects were negligible due to the colour of his skin, he grew up hustling the streets of Cape Town selling newspapers around his city centre home of District Six.

If Robertson’s present is blue and beautiful; you could say his past was a contrast – set against a  brutal and ugly regime.  In the 1970s, armed police arrived in trucks to tear up the lives of thousands of families including the family Robertson. The authorities deemed that so called coloured – or mixed race – people were living too close to so called white areas and shipped 60,000 of them out on the back of trucks and scattered them among the mean dwellings of the Cape Flats, far from the bright lights of Cape Town. There was no rhyme, nor reason to it, whichever way you look at it, people were dumped and forgotten.

“It took me years to find all of my family,” recalls Robertson.

Like many of his fellows, he became a teacher selling insurance, mainly to other teachers, in far flung places in the Northern Province of South Africa.

“It was hard, I used to go to drive to places like Springbok and Beaufort West and sell insurance to teachers, mainly, because I was a teacher. I worked for Old Mutual and that was my market. You go, you drive up to Kimberley you go to different schools and you have to find places to sleep. You would to a garage, park my car and in the morning there are toilets there and you take a bit of a birdbath. There weren’t guest houses there were no places to sleep…But I became one of the top reps at the company,“ he says.

Insurance is very close to his heart and turned out to be an integral part of the pride of Robertson as an entrepreneur.

“I bought a company 18 years ago that had an income of R600,000 – an old burial society that had a life insurance operation licenced in it and I expanded this to a more comprehensive life insurance. In the year 2020, it was doing R 1,2 billion worth of premium income. There were three people employed now its 60-odd people,” says.

A signature investment for a man who made millions for himself and others.