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GS Private Equity - Successful Exit From Hirequip

Issued on behalf of GS Private Equity

21 August 2002

GS Private Equity Announces Successful Exit From Hirequip

Southern Capital Ltd Acquires 50% of Leading NZ Equipment Hire Firm

Leading private equity investment house GS Private Equity has announced the sale of its 50% stake in New Zealand's leading equipment hire company Hirequip Holdings Limited to New Zealand investment company Southern Capital Ltd for A$14.9 million (NZ$17.35 million).

GS Private Equity's successful exit from its Hirequip investment after two years represents a 35% compound return, according to GS Private Equity Executive Director, Mr Greg Minton.

GS Private Equity initiated the formation of Hirequip Holdings Limited in September 2000, then a new company formed by the merger of Hirequip and Projex, the leading equipment hire companies in the South Island and North Island of New Zealand respectively.

Mr Minton says GS Private Equity successfully executed the strategy of merging the Hirequip and Projex businesses.

"Over the past two years a solid platform has been built for Hirequip to move forward. The price paid recognises the value we have created and is a fair price for Southern Capital as well. We wish Stuart McKinlay, the CEO of Hirequip, and Southern Capital every success in taking the business forward," Mr Minton says.

"This type of deal clearly demonstrates how a period of private equity involvement in the development of companies can be beneficial for all parties."

Hirequip, a Dunedin-based private company operating from 36 locations throughout New Zealand, says its annual revenue exceeds NZ$50 million. Its product catalogue has over 100,000 items for hire including excavators, front-end loaders, road rollers, trucks, generators, and compressors. The company also has a party and function hire division.

"This is a significant investment for Southern Capital in terms of its size, cash flow and growth potential. It is also the first industrial operating company in which we have invested," says Graeme Wong, Southern Capital's Executive Chairman.

The other 50% of Hirequip is owned by Stuart McKinlay and family.

"Hirequip has a unique position in the New Zealand equipment hire industry, having the leading market share in all major urban centres in New Zealand and being the only equipment hire company with national coverage," Mr McKinlay says.

"With the financial and operational management resources of GS Private Equity, we have been able to build a truly national company with clear market leadership. Going forward, the involvement of Southern Capital provides Hirequip with a partner who shares our assessment of the sector's potential and who is committed to growing the company."

Southern Capital will have two directors on the board of a new holding company to be formed: Mr Wong and Southern Capital Director Mr Howard Patterson. The other directors of the company are Mr McKinlay and prominent New Zealand company director Mr Trevor Scott, who will remain chairman of the company.

ENDS

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