The famous red double-decker buses in London. But also the light blue local trains in Groningen and Friesland. And the yellow electric vans for transporting students with physical disabilities in Rome.
They all end up in the hands of an American venture investor. Owner Arriva Group, which provides public transport in the United Kingdom, the Netherlands, Italy and seven other European countries, will be acquired. The current parent group, the German state rail company Deutsche Bahn, sells Arriva to I Squared Capital from Miami. Deutsche Bahn and I Squared announced this on Thursday.
Buyer and seller did not provide financial details. The British Press Agency Reuters reported last week that the purchase price would be around 1.6 billion euros (including debts). The transaction should be completed in 2024. In the Netherlands, Arriva is one of the larger providers of public transport. The company has been a nuisance to NS for years. Arriva operates regional buses in the north, east and south of the country. Arriva also operates local trains in the northern provinces and Limburg. Arriva will lose the bus contract in Friesland; this week it was announced that Qbuzz, owned by the Italian state railway company, has won that contract.
Utility
Since rumors of a sale of Arriva circulated last week, the takeover by the American private equity company has caused concern among Dutch provinces, which tender regional public transport, politicians and trade unions.
They fear that an investment company is not the most ideal owner for a utility such as public transport. Public transport costs money rather than allowing you to make large profits, say unions and politicians. Private equity firms have a reputation for reselling an acquired company after only a few years – sometimes with high debts. The province of Limburg will consider whether it wants to maintain or terminate the transport agreement with Arriva now that the carrier has been sold to an American investment fund, reports the ANP news agency.
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In any case, the sale offers Arriva Group the clarity it no longer had within Deutsche Bahn (DB). As early as 2019, DB reported that it would like to divest Arriva. An IPO was also discussed. Deutsche Bahn wants to fully concentrate on train transport in Germany. There, the railway company, which not only runs intercity and local trains but also manages the rail network, faces major investments. In July, DB announced that it wanted to invest 4 billion euros in the rail network in Germany in the coming years.
Arriva Group accounts for approximately 8 percent of Deutsche Bahn’s turnover. In the first half of 2023, according to the most recent financial figures from DB, Arriva achieved a turnover of around 2 billion euros. In the first half of 2022 that was still 2.2 billion. This decline was mainly because Arriva sold activities in Denmark, Serbia and Poland, among others, and because governments no longer financed public transport with corona support.
Arriva achieved a gross profit (before deduction of interest, taxes and write-downs; EBITDA) of 187 million euros in the first six months of 2023. That was 10 million more a year earlier.
The transport company does not break down its results by country. It is not known how well Arriva Netherlands is performing. The total group employs 35,500 people.
Investment company I Square Capital was founded in 2012 by former employees of the American investment bank Morgan Stanley. The fund invests worldwide in (physical and digital) infrastructure, from energy and transport to telecom. The fund is mainly active in North America, Europe, India and China. Since 2018, I Squared Capital has owned the truck company TIP Group, which has its headquarters in Amsterdam.
Infrastructure is currently seen as an attractive sector to invest in. In September, major investor CVC Capital Partners took a majority stake in the Dutch DIF Capital Partners. This fund specializes in infrastructure, energy and telecom.