Exposure to infrastructure, mining pick-up: Seven

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.