Arriva sale completed

[Man of Kent]

The press release confirming completion of the sale to I Squared Capital has been released today.

Arriva Group looks to the future under new ownership

I Squared Capital closes acquisition with Deutsche Bahn for Arriva, one of Europe’s leading providers of passenger transportation; previously announced in October 2023. Deal marks significant moment in Arriva’s history; I Squared commits to provide significant long-term capital to support growth...

news.arriva.co.uk

• I Squared Capital closes acquisition with Deutsche Bahn for Arriva, one of Europe’s leading providers of passenger transportation; previously announced in October 2023.
• Deal marks significant moment in Arriva’s history; I Squared commits to provide significant long-term capital to support growth and decarbonisation.

Monday June 3, 2024: Arriva Group (“Arriva”), a leading provider of passenger transport across Europe, is pleased to announce the completion of its acquisition by I Squared Capital (“I Squared”), a leading independent global infrastructure investment manager. The acquisition, first announced in October 2023, encompasses all of Arriva’s businesses across 11 countries.
Mike Cooper, Arriva Group CEO, welcomed the news and said: “Closing this transaction marks an important milestone and an exciting new chapter for Arriva. It is an opportunity for Arriva to recommit to working alongside passenger transport authorities to deliver essential transport links and build a more sustainable future for our colleagues, customers and the communities we serve. With the backing of I Squared, an independent and highly reputable infrastructure investor, I am confident that we will deliver on that commitment for the benefit of the millions that Arriva serves”.
Mohamed El Gazzar, Senior Partner at I Squared, said: “Passenger transport plays a vital role in society, connecting communities and facilitating economic growth, while reducing carbon emissions and congestion. Arriva plans to be at the heart of this agenda, working alongside its transport authorities and clients. Arriva’s ambition for the decarbonisation of its fleets also aligns with I Squared’s strategy to develop and scale assets with technologies that accelerate the energy transition.”
Enrico Del Prete, Fund Partner at I Squared, added: “Decarbonising public transport is one of the next big challenges in the energy transition and we are excited to work with Arriva to provide the support and investment that will help the company achieve its vision of cleaner cities and greener public transport networks. We see genuine growth potential that can be unlocked at Arriva over the long-term. We are excited for what comes next and look forward to working with the whole Arriva team as we capitalise on the opportunities in the sector together.”
Arriva Group and its operating companies have all transferred to I Squared as part of the deal, ensuring continuity of services across Arriva’s footprint, and reassurance for employees who will continue to serve communities without any changes to their employment conditions.
I Squared has extensive experience in providing essential infrastructure, including transport, logistics, energy, utilities, and digital infrastructure around the world. The company is a leading investor in transport and logistics and in decarbonisation technologies, with a track record of investing significant capital to create sustainable, long-term growth across its portfolio, supporting management teams in improving operational performance, and investing to support the energy transition.
About Arriva Group
Arriva is a leading provider of passenger transport across Europe, employing around 34,400 people and delivering around 1.6 billion passenger journeys. With buses, trains, coaches, trams, waterbuses, bike-sharing systems, on-demand transport solutions and a rolling stock leasing company, Arriva proudly connects people and communities safely, reliably and sustainably across 11 countries, delivering these services in a better way, every day. The activities of Arriva are divided into four business units: UK Bus, UK Trains, The Netherlands and Mainland Europe. Arriva has passenger transport operations in the Czech Republic, Croatia, Hungary, Italy, the Netherlands, Poland, Slovakia, Slovenia, Spain and the United Kingdom, and also operates a rolling stock leasing company in Romania. www.arrivagroup.com
About I Squared Capital
I Squared is a leading independent global infrastructure investor with over $38 billion in assets under management. It is known for the development of investment platforms in infrastructure projects where it starts small and grows big. I Squared uses global insights and deep local intelligence to solve complex problems, foster smarter businesses, serve local communities, and invest in a more sustainable future to provide essential services to millions of people around the world. I Squared is made up of a team of over 260 people, headquartered in Miami with offices in London, Munich, New Delhi, São Paulo, Singapore, Sydney and Taipei. It operates a diverse portfolio of 82 companies in 71 countries with over 66,000 employees in a variety of sectors including utilities, energy, digital infrastructure, transport, environmental infrastructure, and social infrastructure. You can find out more by visiting: www.isquaredcapital.com

 

[Russel]

Don't k know if it's indictive of Arriva bus as a whole or just my local garage, but since the initial announcement around October last year, my local Arriva garage have really let presentation go, the local fleet has always been well looked after but most of the fleet is now in a state of needing a full refurb as things like dented panels or torn seats that would have been replaced as they were damaged before, are now being left.

It's not a garage earmarked for closure, either.

 

[overthewater]

While a business is being sold, the amount of available cash tends to dry up. Now this has been sorted, someone might reopen the purse to pay for on going issues.

 

[cav1975]

Thank goodness for that, it can only get better (hopefully).

 

[greenline712]

My fear is that the condition of the bus fleet (the value of which was written down to zero to encourage the sale) is now so poor that only outright replacement will do.
That is mega-pounds and an investment fund will be looking to get value from their purchase.
Spending money isn't their business model. Don't expect too much from them.

 

[Robertj21a]

My fear is that the condition of the bus fleet (the value of which was written down to zero to encourage the sale) is now so poor that only outright replacement will do.
That is mega-pounds and an investment fund will be looking to get value from their purchase.
Spending money isn't their business model. Don't expect too much from them.

I am expecting a thorough review of the finances (probably mostly done already) and then some bad news announcements in a few bits of the country.

 

[GusB]

This thread will remain open for the time being as it's specifically discussing the bus aspects, but be aware that there is a parallel thread going on here:

UK Railway Discussion

Discussion of any UK railway topic not covered elsewhere.

www.railforums.co.uk

 

[Russel]

My fear is that the condition of the bus fleet (the value of which was written down to zero to encourage the sale) is now so poor that only outright replacement will do.
That is mega-pounds and an investment fund will be looking to get value from their purchase.
Spending money isn't their business model. Don't expect too much from them.

This is the result of not buying new buses in any meaningful quantities for several years and only buying as and when required...

The VDL Pulsars were the last of the larger single deck orders and most of them are now at least 10 years old.

 

[joieman]

This is the result of not buying new buses in any meaningful quantities for several years and only buying as and when required...

The VDL Pulsars were the last of the larger single deck orders and most of them are now at least 10 years old.

Yes, new buses do seem to be ordered in piecemeal quantities these days. But this is probably partly because twenty years ago there was a rush to replace step-entrance buses with low-floor buses. Therefore I think that electrification will likely be the next major impetus for fleet renewal.

 

[duncombec]

What percentage of the Arriva group business is UK Bus? We may need to consider that before sounding the death knell for swathes of the company. arrivagroup.com suggests at the last update that the company had 10 countries, 35,500 "colleagues", 12898 buses and 594 trains, divided into business units UK Bus, UK Trains, Netherlands and Mainland Europe. In the grand scheme of things, to take one example Aylesbury's 17 buses are a rounding error (0.13%, I believe).

I Squared could also look at the business unit and think "This should be making money, so just why isn't it?" - a change of accounting policy/ies, a change of direction, a decision to spend-to-attempt-growth-then-cut-if-doesn't may all be possibilities. Similarly, with franchising on the horizon in the Arriva-heavy areas of Merseyside and West Yorkshire, which is far closer to the "European" model, and thus a guaranteed chunk of money (if they win!), the rest may be allowed to muddle along for a while if the business unit as a whole is working. It may have been interesting to see whether Arriva would have declined to bid in Manchester had the new owners already been in place.

I Squared appear to be a determined infrastructure investor, who have been after Arriva since it was first mooted for sale, and also tried to get hold of First Group. It seems pretty inconceivable that they haven't gone into this with their eyes open and are suddenly going to wave their hands in the air crying "Goodness, what a turkey we've bought, sell it off again quick!". I also can't imagine them hiving bits off to other companies quickly before they've even had a chance to see how things are now they own the company - they might want to sell off something that is making a loss, but why would you sell it for someone else to then let it turn a profit that could have been yours?
They seem to have owned parts of their investments for some time - an Irish electricity supplier since 2016, for example, as well as a large supplier of WiFi in Hong Kong, and other telecommunications, autonomous vehicle and "cool chain" (refrigerated vehicles) companies (see the logo list and subsequent details if you click on one at https://isquaredcapital.com/investments/ - there are 67 companies listed not including Arriva, so please excuse if I don't type the entire list).

It would naturally be foolish to think there will be tens of millions of pounds of investment flowing in overnight, with rapid expansion and new vehicle purchases, but at the same time, it feels that it would be equally foolish to think there will be an immediate sharpening of knives to start chopping off parts of one business unit, which may not even be an equal quarter of the share (of the four units).

If I were what passes for an area Managing Director of Arriva at this moment, I'd be ramping up my business plans trying to persuade the new owners that our business can perform better, if only we had newer buses/more buses/more engineering staff/better engagement with local authorities, etc etc etc.

 

[Titfield]

I hope they have notified the Office of the Traffic Commissioner of the change of ownership. Given the criticism of the condition of the vehicles perhaps some unannounced inspections by the DVSA would be a good idea.

 

[Surreyman]

I hope they have notified the Office of the Traffic Commissioner of the change of ownership. Given the criticism of the condition of the vehicles perhaps some unannounced inspections by the DVSA would be a good idea.

Would they need to? Is there a requirement to do so?

 

[Titfield]

Would they need to? Is there a requirement to do so?

Yes change of ownership is notifiable under the terms of the operators licence(s).

 

[greenline712]

Yes change of ownership is notifiable under the terms of the operators licence(s).

Um . . . not sure about that. It is Arriva plc that has changed ownership, surely? Arriva UK Bus is still owned by Arriva plc? The OpCo's are owned by Arriva UK Bus?
In theory then, the ownership (shareholdings) of Arriva Kent Thameside (for example) is still Arriva UK Bus? There's no change there. The O'Licences are not affected.