Bus sale could come to a stop

Kinetic Group chief executive Michael Sewards. Picture: Wayne Taylor

Some infrastructure investors so far need convincing over the merits of a deal to buy into Australian and United Kingdom bus business Kinetic Group.

Sources say while the Australian operation performs strongly, the conviction on its UK arm is not in the same league, and while there will be certain investors which take a look, it’s so far unclear what parties will be the strongest contenders.

Kinetic’s major market is Queensland and it is promoting itself as a growth story with the rollout of its electric fleet.

But such a rollout is not so easy and the transport industry is low margin and high risk, despite government bus contracts being stable.

Working on a selldown of the business on behalf of owner OP Trust is Macquarie Capital.

Kinetic Group owns the Queensland-based Transit Australia Group, which offers bus design and manufacturing, urban network design, planning and operation and workforce development and training.

Bus services that fall under the group include Sunbus and Surfside Buslines.

It also owns SkyBus, which operates express airport transfers for domestic and international passengers.

OPTrust is a Toronto-based pension fund that purchased Transit Australia Group in 2019, which became Kinetic.

The company is supposedly pitching itself to buyers as one that is in line to generate more than $400m in earnings by next financial year.

It describes itself as Australasia’s biggest bus network with more than 100 long-term contracts in local communities, 7400 staff and a fleet of 5000 buses, including over 300 zero-emission buses.

It’s not the first time Kinetic has come up for offer – OP Trust had it on the market in 2020, and then, the price tag was around $1bn.