EUROPE: German national railway Deutsche Bahn has signed an agreement to sell the whole of Arriva Group to infrastructure investment manager I Squared Capital.
The transaction announced on October 19 is expected to complete in 2024, subject to customary closing conditions including the approval of the DB supervisory board and Germany’s Federal Ministry for Digital Affairs & Transport.
DB acquired Arriva in 2010. The UK-based business now operates train, bus, coach, tram, waterbus, bike-sharing and on-demand transport in the Czech Republic, Croatia, Hungary, Italy, the Netherlands, Poland, Slovakia, Slovenia, Spain and the UK, employing around 35 500 people and carrying 1·5 billion passenger-journeys/year.
‘Strong rail’
DB had announced its intention to sell Arriva as part of its Starke Schiene (‘Strong Rail’) strategy to focus its resources on Germany and its core business.
Arriva’s rail and bus activities in Sweden were sold to Finland’s national railway VR Group in July 2022, and its Portuguese bus business to Israeli company Dan Group n December 2022.
Operations in Serbia and Denmark and the bus — but not rail — activities in Poland were sold to München-based private equity company Mutares earlier this year.
In May German newspaper Handelsblatt reported that FirstGroup, Keolis and I Squared had submitted non-binding offers to acquire the remainder of the Arriva business.
When the sale to I Squared was announced, DB management board member for Finance & Logistics Dr Levin Holle said Arriva had ‘good prospects for sustainable growth as market liberalisation in Europe progresses’, and the new owner would ’give Arriva new options to support its growth potential, for example for the future electrification of European fleets’.
For DB the sale ’is an important step to focus even more on additional growth in rail transport in Germany’.
‘New lease of life’
Miami-based private equity investor I Squared Capital focuses on the energy, utilities, telecom and transport sectors in the Americas, Europe and Asia. It has more than $37bn in assets under management with a portfolio of 72 companies in 59 countries with over 27 000 employees. In 2022 a proposal to acquire UK transport operator FirstGroup was rejected.
‘Arriva’s strategy for net-zero operations and the decarbonisation of its fleet aligns with our strategy to develop and scale assets with technologies that accelerate the energy transition, as well as providing cleaner air in cities and towns by investing in green public transport’, said I Squared Global CIO & Managing Partner Gautam Bhandari.
Arriva Group CEO Mike Cooper said ‘I Squared has an established track record of supporting companies which provide essential services, and of investing in the energy transition. We are delighted that they have committed to provide Arriva with long-term capital for investment in innovation across our services, our assets and our people.’
He said the Arriva brand and values ‘will not only be unchanged by the transaction, but they will be given a new lease of life’, as part of ’our ambition to become the leading passenger transport partner across Europe’.
