Seven Group Becomes a Cornerstone Investor in the Initial Public Offering and Listing of Agricultural Bank of China

Seven Group becomes a cornerstone investor in the initial public offering and listing of Agricultural Bank of China.

WesTrac to accelerate growth opportunities in China as Seven Group and Agricultural Bank of China sign memorandum of understanding on strategic cooperation and growth of WesTrac China.

Seven Group Holdings Limited (Seven) today announced the signing of a Memorandum of Understanding and an Investment Agreement with the Agricultural Bank of China, one of the four biggest national banks in China – pursuant to which Seven will become one of a number of cornerstone investors in the bank’s forthcoming initial public offering in Hong Kong and Shanghai.

These agreements significantly strengthen Seven’s existing relationships in China and allow the company to expand its participation in China’s economic growth and support the growth of WesTrac China.

As part of the investment agreement, Seven will invest $US250 million as a cornerstone investor in the IPO of Agricultural Bank of China as part of a broad strategy to underpin the development of Seven’s WesTrac China business and create new opportunities for Seven to leverage China’s economic growth.

Agricultural Bank of China is the country’s largest bank by retail customers – with 320 million retail clients in China.

WesTrac China operates as one of only four authorised Caterpillar dealers in China, covering six provinces covering 2.3 million square kilometres in some of China’s fastest growing and most mineral rich regions in the north-east of the country. WesTrac China is expected to achieve forecast sales approaching $A900 million in FY2011.

Details on Seven’s investment were released today by Seven Executive Chairman, Mr Kerry Stokes, and Chief Executive Officer, Mr Peter Gammell.

“Our decision to become a cornerstone investor in Agricultural Bank of China’s initial public offering makes sound business and financial sense,” Mr Stokes said. “This is an investment we see delivering value and strategic return for Seven Group Holdings. We intend this investment to be a hold for the medium term.”

The Chairman and Executive Director of the Agricultural Bank of China, Dr. Xiang Junbo said “Both companies have a long history and commitment to China. We look forward to working together with Seven Group.”

In addition, Seven and Agricultural Bank of China have entered into a memorandum of understanding which will see the Agricultural Bank of China and Seven form a strategic alliance focusing on the growth of Seven’s WesTrac China business and the creation of mutual business opportunities for WesTrac and Agricultural Bank of China clients.

Under the memorandum of understanding both companies will focus on developing financing and leasing solutions for WesTrac China’s customers, sharing of customer relationships for the progression of respective business opportunities, and the development of new joint business opportunities for WesTrac China and Agricultural Bank of China in China and other international markets.

Also under the memorandum of understanding, both companies will support the establishment of an international board of advisors to work with Agricultural Bank’s executive team and chairman on growth objectives in China and abroad. WesTrac China will also explore a corporate financing relationship with the Agricultural Bank with the aim of providing a long term financing facility that supports WesTrac’s and its customers’ contribution to the economic growth of China.

The memorandum of understanding was signed in Beijing between Dr Zhang Yun, Vice Chairman and President of the Agricultural Bank of China, and Mr Peter Gammell, CEO of Seven.

Commenting, Mr Gammell said: “China is a critical market for WesTrac’s future development and we believe the company’s investment in the Agricultural Bank of China will deliver significant benefits to WesTrac and Seven Group. In China the importance of financing linked to product sales is critical and we believe that this agreement lays the foundation for ensuring and enhancing WesTrac’s future growth.”

“Today’s agreement with Agricultural Bank of China provides us with significant opportunities to grow our Caterpillar dealership business in China and participate in a public offering for one of the largest and most successful banks in the world’s fastest-growing economy. We believe the investment will add value for our shareholders.”

Dr. Zhang Yun said “We are pleased to sign this memorandum of understanding together to develop opportunities for our customers to serve the mining and infrastructure sectors to boost Chinese economic development.”

The Agricultural Bank of China has the largest geographic footprint of the Chinese Banks including over 6,400 branches within the WesTrac China dealership territory. There is an opportunity for a strategic relationship to develop customers and offer tailored customer financing solutions.

Mr Gammell said: “In forming Seven Group, we set out to bring together two strongly performing companies with opportunities for future growth. We have strong media platforms and a market-leading presence in equipment delivery and management with our Caterpillar dealerships. We also have the financial capacity to further strengthen these two major businesses and expand into new sectors.”

Seven Group

Seven Group Holdings Limited – a leading Australian diversified operating and investment company - listed on the Australian Securities Exchange in May following shareholder approval for the merger of Seven Network Limited and WesTrac Holdings to create a new diversified operating and investment group. The new company delivers shareholders a company with a market-leading presence in media and the resource services sector, as well as an expanding business presence in China.

Seven Group comprises WesTrac Group; Seven Media Group, a joint venture with Kohlberg Kravis Roberts comprising Australia’s leading television network, Seven Network; Pacific Magazines, one of Australia’s two largest magazine publishing companies, and Yahoo!7. Seven Group also has significant shareholdings in Western Australian Holdings, the leading media group in Western Australia and Consolidated Media Holdings, which has a leading presence in subscription television through a 25% shareholding in Foxtel and a 50% shareholding in Premier Media Group.

WesTrac

WesTrac Group has an ownership interest in three key businesses, a 100% interest in each of WesTrac Australia and WesTrac China and a 66% interest in National Hire Group Limited (“National Hire”) a company listed on the ASX which itself has 46% of Coates Hire.

WesTrac Australia operates the sole authorised Caterpillar dealer in WA, NSW and the ACT, providing equipment sales, service, and support, and is the market leader in each of these territories. WesTrac Australia services the mining, infrastructure, and non-residential construction markets in each of these regions.

WesTrac China operates as one of only four authorised Caterpillar dealers in China, covering six provinces in some of China’s fastest growing and most mineral rich regions.

Coates Hire is the largest equipment hire business in Australia with over 200 branches and satellite locations. It serves the mining, construction, infrastructure project and event management sectors.

Agricultural Bank of China

Agricultural Bank of China Limited (“ABC”), established in 1951, is one of the big four state-controlled banks in China. With the largest network across the country, ABC provides convenient and efficient financial services to over 320 million retail clients in China. As of 31 December 2009, ABC had 23,624 branches and outlets nationwide and 41,011 ATMs.

It offers a wide range of financial products to both urban and rural clients. ABC ranked No. 8 in The Banker’s “Top 1000 World Banks” list in terms of profit before tax for the year of 2008.