Private equity firm exits bus services business

Sydney private equity firm Next Capital has exited its investment in NZ Bus with the acquisition of the business by Australia and New Zealand’s largest private bus services operator Kinetic, an investee of Sydney-based Infrastructure Capital Group and Canadian pension fund OPTrust, which has a Sydney investment office.

The New Zealand bus lines business was sold following a competitive bid process run by investment bank UBS.

NZ Bus runs one of the largest urban bus operations in New Zealand operating more than 700 buses servicing government contracts in Auckland, Wellington and Tauranga.

Financial details of the transaction have not been disclosed but the sale price is believed to be around $NZ400 million.

Kinetic’s origins can be traced back to a single bus operation in Melbourne 40 years ago. More recently the business has been a private capital-backed roll-up that became Australia and New Zealand’s largest private bus operator. The company holds 53 bus services contracts and operates from 56 depots, from Cairns to Hobart and from Auckland to Dunedin. Kinetic also runs the SkyBus operations servicing Melbourne’s Tullamarine and Avalon airports, Hobart Airport, Gold Coast Airport and Auckland Airport.

Next Capital acquired NZ Bus only in 2019 (APE&VCJ, Feb 2019) buying the business from infrastructure investment company Infratil (ASX/NZX: IFT) for $NZ218-$NZ240.

Last year, KKR paid around $NZ500 million to acquire New Zealand bus company Ritchies Transport.

In 2020, Kinetic acquired New Zealand Bus company Go Bus from Māori fund managers Ngāi Tahu and Tainui Group. The two firms had acquired that business from Next Capital in 2014. Kinetic also owns New Zealand bus company Johnston’s.

Last year, Auckland Transport announced that in partnership with Go Bus it had placed a large order for electric buses. Through Go Bus, Kinetic already operates 35 electric buses in Christchurch and Auckland. Kinetic also plans to soon introduce the first of 36 new electric buses in Melbourne in partnership with the Victorian government. The company also plans to add a further 20 electric buses to its Queensland government contracted services by June.   

Kinetic co-chief executive Michael Sewards said the company planned for its fleet to comprise 50% zero emission vehicles by 2030.

“In our experience, New Zealand is leading the charge on the global stage in the transition to zero-emission busing, as demand for public transport grows and bus transportation is recognised as an increasingly popular mode of sustainable transport,” he said.

Kinetic was advised on the acquisition by Cameron Partners, Chapman Tripp and Deloitte while NZ Bus was advised by Murray & Co, UBS and MinterEllisonRuddWatts.

Image: NZ Bus buyer Kinetic plans for its fleet to comprise 50% zero emission vehicles by 2030.