The business pages of British newspapers have been dominated in recent years by a flurry of deal-making from gas station entrepreneurs Mohin and Zuber Issa and private equity group TDR Capital. Now the investors have made their first foray into venture investing after leading a $80 million investment in fintech Bud.
The Series B round is at a radically different scale from the deals normally struck by the Blackburn, Lancashire-based brothers, and their private equity backers TDR. The investors teamed up to buy Asda, Britain’s third-largest supermarket chain from Walmart for $8.5 billion in February 2021, and have now mounted a $8.7 billion bid to acquire pharmacy chain Boots from Walgreens.
The investment in the London-based startup, which uses AI to automate affordability checks, likely plays a role in the Issa brothers and TDR Capital’s plan for Asda. TDR teamed up with KKR in November to acquire a majority stake in Jaja Finance in November 2021, and the credit card lender signed a deal with Asda last month to launch a digital reward card, while Asda has its own financial services arm offering loans and insurance products.
“We are hugely excited by the potential of Bud, not only in the ability of its platform to truly harness the opportunities from open banking, but also in its far-reaching potential to help power other businesses we are invested in,” says Gary Lindsay, Managing Partner at TDR Capital.
Forbes understands that the London-based private equity group, which also owns restaurant chain Pizza Express and David Lloyd gyms, has approached other fintech startups to make investments. The deals are often structured as a mix of traditional cash for equity, and warrants tied to TDR helping startups grow by connecting them with its portfolio companies.
Bud’s move to raise cash from an unconventional source, comes as fintech startups face a squeeze on valuations, and funding, after a sharp sell-off in the share price of listed companies like Affirm, Sofi, and Robinhood. The Series B round also included SEI Investments, and fintech specialist Outward VC.
Bud had raised $20 million from HSBC, Goldman Sachs and ANZ for a Series A round in 2019 to compete with “open banking” rivals Tink, Truelayer and Plaid which connect banks, startups and other financial institutions to allow secure data sharing and app building.
The Issa brothers have built a retail empire from buying a single gas station in 2001. The pair’s EG Group now operates over 6,300 gas stations in the U.K, Europe and U.S. and acquired Asda in 2021 in the U.K.’s largest-ever leveraged buyout with the backing of TDR. The wealthy brothers are understood to have made at least one venture investment in sportswear brand Castore via a holding company Monte Group.