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From child entrepreneur to multimillionaire businessman with a heart for conservation
Mac van der Merwe’s story is one of those inspiring rags to riches tales that leaves all those who hear it both impressed and inspired. It sounds like a childhood fairy tale, with a uniquely local South African flavour, to hear how the middle son of a poor family struggling to make ends meet after World War 2 manages, through his own initiative, to become a multimillionaire in the hospitality, property development, travel and wine industries.
What makes the story read even more like a fairy tale is the fact that Van der Merwe seems unaffected by his fortunes. The founder and chief executive officer of the family-owned Zorgvliet Group is quietly confident and soft spoken, genial and easy to talk to. There is no sign of bling or excess despite the string of five-star resorts he has developed.
But this is more than merely a rags-to-riches story – or about Van der Merwe’s plans to build a hospitality network in South Africa which showcases the best that the country has to offer; it is about quiet determination, the decision not to battle like his parents did, and the decision to make a difference.
Van der Merwe learnt several defining life principles from his father, including the value of hard work and the idea that we are custodians of property rather than the owners.
As a result, Van der Merwe feels a strong need to leave a positive legacy, and through his business involvements has sought to add value in many ways – and make a difference in South Africa.
But let us start at the beginning.
Galvanised into action by his poor upbringing and hard-working parents, Van der Merwe showed a talent for business at a young age. At eight years old, the young boy set up his first business venture on the steps of his father’s small general dealership, charging one pence a time for people to look at images through his View-Master toy.
“I was always busy with some sort of scheme, buying and selling, creating opportunities”, says Van der Merwe. He even sold bicycles rebuilt by his grandfather, but says he was better at scheming than selling.
Van der Merwe says that although he always passed his grade, he was not a good scholar and was more interested in sport – rugby, golf, cricket – anything with a ball. But his entrepreneurial ability saw him start out in the business world in 1982 with a car dealership, which rapidly expanded into seven branches.
His commitment to precision saw Van der Merwe, then a qualified mechanical engineer, start his own engineering company, initially supplying support engineering for the steel industry. His engineering business in Meyerton expanded to Germiston and Saldanha and was eventually listed on the Johannesburg Stock Exchange (JSE) as City Investment Holdings in 1996.
With his nose for a good investment opportunity becoming finely honed, Van der Merwe branched out into the information technology industry in 1993, importing technology from Canada just before the IT boom hit South Africa. His IT arm, Spicer Mitchell, was listed on the JSE in 1996 in a reverse takeover that saw new investors take control with a majority shareholding.
Van der Merwe says this was his first real exposure to business. Up until then he was involved in manufacturing and selling, now he had to learn how to unlock value for shareholders.
The year 1996 was an important milestone for Van der Merwe’s fortunes. It was also the year he and two other partners purchased the run-down President Steyn gold mine in Welkom from AngloGold.
Van der Merwe says it was a difficult process buying and running a mine. “We initially lost a lot of money due to lack of knowledge, but then brought in the right acumen.”
He operated the mine for five years and listed the company on the JSE. “Listing is the way to spread the risk,” says Van der Merwe, who sold the mine to a Toronto-listed company Thistle in 2000 for US$32 million.
Due to the structure of the sales agreement, the sale was very profitable for him, with the value trebling over a couple of months.
“Success is relative,” says Van der Merwe, now 61.
“Some people see success as determined by one’s balance sheet, but there are many people who make money, but are not fulfilled within themselves.”
He sees his success as having created a close-knit family unit and delights in family time, whether it is playing golf with his son and son-in-law, spending quality time with his wife, Marietjie and daughters, or entertaining his six grandchildren who delight in pestering granddad to take them quad biking.
He says success or the lack thereof is partly a result of luck, making the right decisions and acquiring the right assets; but stresses that underpinning every success is a strategy – one backed by business acumen. “Success is not achieved through default or even hard work, but by working your plan,” confides Van der Merwe, who also studied an MBA part-time through Unisa.
“I’m like a bull dog,” he says. “This is both a strength and a weakness. I can be persistent, but I don’t always know when to let go and as a result sometimes blur issues and fail to see the wood from the trees.”
“I’m an opportunist,” adds Van der Merwe. He says his father had no appetite for risk, but this clearly did not rub off. “Paralysis by analysis” is one phrase that is the antithesis of his business strategy.
Having literally made his millions, Van der Merwe was faced with the question of what to do next. He didn’t want to retire and was looking at the possibility of investing in a specific kind of lifestyle and had been considering a wine farm – this led to the decision to build a top-class hospitality network, focusing on the ‘best that South Africa has to offer’.
True to form, Van der Merwe had a plan. He decided to search for unique properties that had the advantage of a spectacular setting, had a sense of heritage and were largely undeveloped so that they could be moulded around his vision.
Realising that 80% of foreign visitors to South Africa come to the Western Cape, this province was Van der Merwe’s first area of focus. The famous Stellenbosch wine farm, Zorgvliet, came up for auction in 2002 and Van der Merwe won the bid, purchasing the first of the Zorgvliet Groups’ properties for the bargain price of R31m.
The Zorgvliet Group bought the Riviera on Vaal Hotel on auction in December 2003.
The Riviera is just a stone’s throw away from where Van der Merwe grew up. He admits that he bought it for sentimental reasons, and says the first meal he and Marietjie had was at the Riviera – around the age of 19 or 20.
Reminiscing on his earlier days, Van der Merwe decided that one way to give back to the community was to employ only local people. In hindsight he admits it was somewhat naïve, given the standards required for a five-star establishment. It took up to two years to train people – but he stuck to the decision and now uses this as part of his business model and has benefited the local communities in the areas he operates.
Other properties added to the growing Zorgvliet Group portfolio were two adjacent private game farms in the malaria-free Waterberg area of Limpopo. About 30 kilometres outside Vaalwater, Van der Merwe adds value through a strong focus on conservation projects at the luxury Ka’Ingo Private Game Reserve and Spa, which includes leopard conservation and the reintroduction of cheetah as well as a buffalo and sable breeding project.
After two years of negotiations between Ka’Ingo and neighbouring Mokolo Game Farm (owned and run by a reclusive German lady, Heidi Behr), the two parties signed a massive 70-page agreement (including annexes) in April to create a Section 21 company to oversee game and conservation management – which paves the way to taking down the shared fences between the two reserves to create the Greater Mokolo Nature Reserve.
The fences are due to be dropped in mid-July and both excited parties feel that this takes conservation one step further. The combined area makes both farms more sustainable from a wildlife conservation perspective.
Although this is not the first time that fences between farms have been taken down, they have forged ahead of protracted negotiations to include government land abutting Behr’s property and hope to be able to use the agreed model to encourage further co-operation with other neighbouring farms in the area.
“Eight months ago I said this wouldn’t happen,” said Van der Merwe at the signing of the agreement. It seemed too difficult to find a way for a purist reserve to drop fences with one that focuses on sustainable eco-tourism, but through persistence it has been achieved.
Both Van der Merwe and Behr are confident that this will pave the way for incorporating the Limpopo Province land and nearby dam into the greater reserve within a year.
The Zorgvliet Group now also owns majority shares in the King George Hotel on the Garden Route and has expanded its business model to include a travel agency as well as a property development division that will focus on fractional ownership.
It is through fractional ownership that Van der Merwe hopes to encourage people to invest in full title ownership of unique properties, while ensuring sustainable access and sound conservation management – part of his custodianship vision.
Van der Merwe plans to be a leader in opening up the fractional ownership market in South Africa and – yes – listing this model on the JSE is also an option that he is likely to be considering. s
Sharon Davis
