Fletcher Building suffered an annus horribilis in 2017, and 2018 is looking like it will be testing for the company as well.

Australia's Wesfarmers has bought a stake of about 3 to 4 per cent in the strife-ridden construction and industrial materials company Fletcher Building, according to some sources close to Wesfarmers.

Fletcher is dual-listed on the Australian and New Zealand stock exchanges and is one of the largest listed companies in New Zealand. It has assets on both sides of the Tasman, about 21,000 employees and a market value of $4.1 billion.

One of the big questions hanging over newly installed Wesfarmers boss Rob Scott is where he will look to invest shareholders' cash once he has demerged the Coles Australian supermarket business.

While there is pressure from the market to show he has plans to revive investor returns - which have flagged over the past three years - there is growing speculation the Perth-headquartered giant has already identified Fletcher Building as one potential acquisition target.

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The circa-A$18b (NZ$18.9b) demerger of Coles later this year will drastically reshape Wesfarmers given the supermarket chain is the conglomerate's biggest business, accounting for 60 per cent of its tied-up capital.

EMMA DANGERFIELD/STUFF Wesfarmers owns building and hardware supplies chain Bunnings.

A full bid for Fletcher would be a large bite for Scott and Wesfarmers but certainly a lot smaller than the original A$19b takeover of Coles – which also included the Target and Kmart businesses – in 2007.

The potential attractions of Fletcher as a turnaround investment would potentially fit well with Wesfarmers' stated strategy. Fletcher has been in strife in recent months after delays and cost blow-outs at 16 major construction projects, and was forced to enter an extended trading halt in February to finalise the extent of the losses ahead of a market update.

Fletcher's share price has fallen 45 per cent since January 2017, and it is considering selling assets as part of a business-wide review.

Wesfarmers declined to comment on the stake.

A spokeswoman for Fletcher said: "We are not aware of a shareholding in the name of Wesfarmers in Fletcher Building."

It is likely that Wesfarmers would buy stock on an anonymous basis through a nominee entity and would only have to declare its holding once its stake reached 5 per cent.

DAVID WHITE/STUFF Fletcher Chairman Sir Ralph Norris resigned amid the company's crisis.

The revelation of Wesfarmers' stake in Fletcher comes as the market anticipates where it will look to expand under Scott, who took on the top job in November last year.

When Scott announced last month that he would spin off Coles into a separate company sitting in the ASX top-30, he said the supermarket chain was not growing fast enough to generate the kind of returns shareholders expected.

He said carving it out would allow the company to drive growth at its remaining businesses and look for new acquisitions that promised the kind of growth Coles delivered during its decade-long turnaround under Wesfarmer's ownership.

Fletcher's business includes making building products, including under the brands Winstone Wallboards, Altus aluminium, and the road barrier supplier Australian Construction Products.

It also has a number of retail brands selling trade and pluming supplies inducing Tradelink, PlaceMakers and Calder Stewart Roofing, which could complement Wesfarmers' prized Bunnings chain.

Wesfarmers has flagged that its industrials division headed by former Goldman Sachs banker David Baxby, which spans building equipment, chemicals, fertilisers and work wear, was primed to acquire new businesses.

Sir Ralph Norris, a former Commonwealth Bank chief executive, resigned as chairman of Fletcher amid its crisis.

SUPPLIED Fletcher Building is expected to lose $410 million on the SkyCity International Convention Centre project.

Fletcher's troubled projects include the building of Auckland's International Convention Centre for listed casino giant SkyCity, which Fletcher estimates will lose it $410m on instead of an intended $400m to $500m profit.

The project is due to be completed about six months behind schedule in mid-2019, and SkyCity has indicated it will take legal action to recoup losses from Fletcher because of the delays.

Fletcher is also facing headaches at Christchurch's new justice precinct, and at a new office and retail centre in central Auckland.

Fletcher's building and construction division lost $631m in the first half of 2018.

Fletcher Building reported an operating earnings loss of $322 million for the half year to December 31 compared to a $310m profit before significant items the same period a year earlier.

Wesfarmers' hunt for acquisitions is being led by its head of business development Edward Bostock, who joined in October 2017 from investment firm Kohlberg Kravis Roberts, where he was a director in its private equity team.