Exposure to infrastructure, mining pick-up: Seven

Robert Frost

OC Funds Management

Several significant corporate transactions saw us add Seven Group Holdings (ASX:SVW) to our portfolio during the September quarter. These included:

  • the sale of WesTrac China to Lei Sing Hong Machinery for $540m
  • the acquisition of the remaining 53.3% of Coates Hire not already owned by the Group for $517m, and
  • a capital raising of $375m to increase the free float in the stock and provide balance sheet flexibility.

Seven's key assets now comprise:

  • Coates Hire - the leading Australian equipment hire business, with over 200 branches and national footprint
  • WesTrac Australia - Australia's largest authorised Caterpillar dealership, including sales, finance, maintenance and resale
  • AllightSykes - a supplier of light towers, generators and pumps, and
  • Seven West Media - in which Seven owns a 41% stake.

We view Seven as an excellent exposure to an expected pick-up in both the Australian infrastructure investment cycle and the mining cycle, both of which appear to be in the early stages of a recovery which could run several years.

1 stock mentioned

Robert Frost
Head of Investments
OC Funds Management

Robert was appointed Head of Investments in 2009 and has been a Portfolio Manager since joining OC Funds Management in 2001. Robert is also an Executive Director of parent company, Copia Investment Partners.

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