The billionaire Blackburn brothers bringing Asda back into British hands

Zuber and Mohsin Issa learnt about hard graft from an early age. Brought up in a terraced house in Lancashire, their parents had moved from India in the 1970s to work in the textile industry.

By the early Noughties, the brothers - who are now aged 48 and 49 respectively – had saved up enough money to buy their first petrol station in Bury, Greater Manchester.

Fast forward 19 years and not only are they one of the biggest forecourt and convenience store operators in the world, they have now won control of one of UK retailing's best-known names, Asda – and enjoy the high-flying lifestyle only available to the mega-rich.

“They never in their wildest dreams would have imagined 5,500 gas stations in nine markets,” Ilyas Munshi, one of the brothers’ top lieutenants told US trade magazine CSP last year. “If they had only 20 sites, they would have felt they had done their job.”

Theirs is a rags-to-riches story of Dickensian proportions. And like all great stories, it started with a very simple idea.

Since the invention of the combustion engine, oil titans have sought to peddle their wares from forecourts around the world. The likes of BP, Shell and Esso became household names as the car became the prevailing method of transport.

But by the Noughties, forecourt operations had become something of a distraction. Rocketing fuel duty meant petrol stations were lumbered with wafer-thin margins. It was a lot of effort for not much reward.

The Issas saw things differently with their company, EG Group.

They agreed with the oil majors that there was no money to be made selling fuel but saw it as a means to an end: petrol stations provided a captive retail market for some of the world’s best loved brands.

In the UK, this meant buying the forecourts and inserting a Greggs or Starbucks. In the US or Australia, EG would tack on a convenience store such as Kroger.

The business was turbocharged when TDR Capital, a London investment firm behind David Lloyd gyms and We Buy Any Car, bought a 50pc stake in EG in 2015.

Armed with the financial ingenuity of a major backer, the EG Group went on a debt-fuelled spending spree, scooping up sites not in the hundreds, but the thousands.

By last year EG had become the fourth-biggest borrower in Europe’s €100bn market for collateralised loan obligations - where corporate debt is packaged together to mitigate risk.

“It is about location, location, location,” said Zuber in a rare public appearance in late 2018.

“To be successful in business you have to have a great bunch of people out there running things. And we do,” he told the Financial Times in an interview to celebrate the award of EY UK entrepreneurs of the year.

There are plenty of parallels between Asda’s humble beginnings and those of EG Group. The UK’s third-largest supermarket can be traced back to the Asquith family and their butcher’s Knottingly, Yorkshire.

Asda grew out of a string of post-war deals into Associated Dairies & Farm Stores, with the first story opened after the founding Asquith family visited the US.

These days Asda has more than 600 stores, but it has not forgotten its Yorkshire roots. The supermarket has resisted the temptation to shift its headquarters down south, with operations still run from Leeds.

The brothers donate 2.5pc of their wealth to charity through the Issa Foundation, which supports hospitals and provides free breakfasts for schoolchildren in and around Blackburn.

Speaking last year, Zuber said: “Education is the only way to get people out of poverty. Our parents came to the UK in the 1960s with nothing. This is our way of saying ‘thank you’ because the UK has provided us with a fantastic opportunity to build our business.”

While the Issas have bought a £25m Knightsbridge mansion – sparking controversy among neighbours with plans for a four-story basement featuring a swimming pool, gym, music room, and cinema – like Asda, they have otherwise doggedly refused to be drawn to the bright lights of the capital.

Instead they remain mostly based in Blackburn, where they are building five identical mansions just three miles from their childhood home – despite opposition from neighbours who worried the properties would change the character of the area.

“As you can appreciate, a business our size and global standing is regularly advised to move to a major city – many times to London or Manchester,” Zuber said as EG Group announced plans for a new 90,000 square foot headquarters in Blackburn in 2017.

“However, we are proud of our Lancashire heritage and to date have resisted such suggestions."

The only wrinkle, Asda's founders might think, is that EG is on the wrong side of the Pennines.