The Kerry Stokes recipe for success: work hard, stay nimble

The secret to Kerry Stokes’s success? Work hard and stay nimble. That’s according to Warwick Smith, a long-time adviser to the Stokes family.

The ruthless battle to gain control over Boral – one of Australia’s oldest manufacturers – underscored that Kerry Stokes retained the corporate clout and willingness to challenge underperforming companies. Picture: Colin Murty

The secret to Kerry Stokes’s success? Work hard and stay nimble. That’s according to Warwick Smith, a long-time adviser to the Stokes family.

“With his diversification strategy, the trajectory has been consistently the same over a long period,” Smith says.

“And that is, values have gone up. He’s been successful. Sometimes it goes down a bit and then it comes back again.

“But the trajectory over time has been up.

“You look at the size of the company 25 years ago and the size of the company now.”

The same could be said about the man himself – born into poverty in Melbourne, adopted out by his mother at an early age, left high school at 14.

If you looked at Stokes 65 years ago, you’d never have guessed that he’d have ended up where he is now.

In an interview with the ABC in 2000, Stokes offered a glimpse into his humble beginnings.

“I had lots of different occupations and obviously lots of different experiences. Sometimes I had some time on the street, and sometimes work was very difficult. Australia, in that period of time, wasn’t a place where you could actually easily go and get a job, it was difficult, and we went where there was work available,” he said.

“And we have a slightly different ethos today, people expect jobs to be where they’re available.”

Stokes went where jobs were, kickstarting his career in property development during the 1960s and ’70s.

That was to whet his appetite for investments and acquisitions in media, mining and construction equipment.

He acquired Canberra’s local TV station Seven Canberra in 1979, bought into the Caterpillar franchise in Western Australia in the ’80s, and by the time he purchased a strategic 19 per cent stake in the Seven Network in 1996 he was well on the way to billionaire status.

Stokes’s Seven Group was created following a restructuring of his business interests in 2010, combining heavy machinery company WesTrac Holdings with the Seven Network along with Coates Hire.

By the time Kerry Stokes purchased a strategic 19 per cent stake in the Seven Network in 1996 he was well on the way to billionaire status. Picture: AAP

From the start Seven Group had a wide portfolio of investments including a 24 per cent stake in the James Packer-backed Consolidated Media Holdings and a stake in the Agricultural Bank of China.

An unexpected move into energy followed years later after Stokes picked out former Woodside Petroleum boss Don Voelte to scour for energy bargains.

Capitalising on undervalued stocks has been part of the Seven Group strategy.

One of its first plays was securing Australian gas explorer Nexus Energy for about $200m.

Seven took over Nexus by securing control of the company’s debt and making an offer to shareholders.

When Nexus shareholders voted that offer down as too low, Seven purchased the company through the administrators and paid nothing for the equity, despite legal action launched by prominent shareholders.

South Australia’s Beach Energy was Seven’s next target in early 2015 when it emerged with a small stake, pouncing on plunging oil prices that had sliced its target’s shares in half in the prior six months. It crept up the register and now owns a 30 per cent stake, handing it exposure to both the east coast and West Australian gas markets.

Strategic moves to buy out the rest of Coates, sell WesTrac China and launch its audacious raid on construction materials giant Boral over a year ago have all been well received by investors, with the company’s shares up nearly threefold since 2017.

The ruthless battle to gain control over Boral – one of Australia’s oldest manufacturers – underscored that Stokes retained the corporate clout and willingness to challenge underperforming companies.

Seven made its move on Boral after a string of profit downgrades under previous boss Mike Kane, handing it exposure to an infrastructure-led recovery out of Covid-19 and influence on the future direction of the company. The elevation of son Ryan as Boral chairman also marked a changing of the guard in the Stokes family.