Suitors are lining up to take a look at bus company Kinetic, with the British operations of particular interest in the $4bn sale process.
It is understood suitors have signed documents to gain confidential information in a data room, and first round offers are due by the end of August or early September for the company which owns Transit Australia and SkyBus.
The dilemma for Kinetic’s owners is there appears to be more interest in parts of the company — particularly the British unit — than there is in the whole.
The British arm has caught the attention of France’s Keolis, which generates about €7bn ($11.5bn) of annual revenue operating public transport systems globally — including a joint venture with Australian listed services provider Downer.
SNCF, France’s state-owned railway company, owns 70 per cent of Keolis. Canadian pension fund Caisse de depot et placement du Quebec (CDPQ) owns the remainder.
The other suitor interested in the British operation is I Squared, which owns the European passenger transport provider Arriva.
I Squared has more than $US38bn ($55.9bn) of assets under management and is known for the development of investment platforms in infrastructure projects at their early stages.
Based in Miami, I Squared operates a portfolio of 82 companies in 71 countries across utilities, energy, digital infrastructure, transport, environmental infrastructure and social infrastructure.
In June, it finalised its deal to buy Arriva, which has buses, trains, coaches, trams and water buses across 11 countries.
According to The Times, the transaction valued the company at €1.6bn.
For the Australian operation of Kinetic, the only name to have surfaced so far is IFM.
It is understood Kinetic’s management is keen to keep the business together to maximise value, so consortiums could emerge.
The understanding is bidders are looking to pay five or six times earnings for the British operations, which is below the owner’s price expectations.
It means the Australian arm would have to go for a substantial price — about 12 times earnings.
Kinetic’s owners hope for a price around 10 times, overall.
Investment bank Macquarie Capital is running the sale process.
Owners include OP Trust, a Toronto-based pension fund which in 2019 purchased the Queensland-based Transit Australia Group, which later became Kinetic, and Foresight Group, which gained exposure after buying Australia’s Infrastructure Capital Group.
Management owns a small stake.
Transit Australia has bus services that include Sunbus and Surfside Buslines, which have been rebranded to Kinetic.
It also owns SkyBus, which operates express airport transfers for domestic and international passengers.
The company is being pitched to buyers as generating more than $400m in earnings by next financial year, about half of which is generated in Australia.
In Australia, Kinetic’s major market is Queensland. It is promoting itself as a growth story with the rollout of its electric fleet.
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.
OP Trust had the business on the market in 2020.
Back then, the price tag was around $1bn.
However, this was before it purchased the British bus business Go-Ahead for about $1.5bn.
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