Diamond Bus North West

[Winston]

RE: Diamond Bus North West

(14/07/2019 00:15)gilesbus1 Wrote:  What's likely with Arriva and indicated by the bids so far is that it will be bought out by Venture Capitalists, they buy and break up business' in order to squeeze maximum returns out of them, it can be done in all sorts of different ways, I also suspect depots might close as a return can be made on selling the depots off as they are just merely seen as another asset from which a source of revenue can come in from. I think the maximum time a venture capitalist would retain a business for would be five years and eventually then you would see the movement in subsidiaries as individual sales. I suspect a Venture Capitalist might also buy First UK Bus and do likewise, but I suspect FirstGroup want out quickly so are open to any offers for subsidiaries so long as they meet there valuations they have in there head.

Operators will come in one the Venture Capitalists are out of the way, but be warned break ups by Venture Capitalists can sometimes be quite strange by structure, e.g. all the Scottish operations of FirstGroup as one separate sale for example, or you could have Glasgow Caladonia depot goes to one buyer, Dumbarton to another and everything else to somebody else as its all open to negotiation, sometimes done with other venture capitalists, e.g. sometimes one business lot passes on to another business lot owned by the same venture capitalist.

Quite often the first infrastructure to go on take over by a venture capitalist is the head office. Any property left close to a City Centre or a housing site might go quickly as well, as the values of them are potentially high.

If Hyde Road Depot in Manchester for example was owned by a Venture Capitalist the likelihood would be that it would be sold to a Construction Company for a retail park given the size of it and its location at the side of a main road on a major corridor into Manchester and the vastness of the site there, much of which is mothballed and out of use, and somehow its surprising Stagecoach haven't done that over time.

Having said that though mileage costs are kept low by having Hyde Road as are wage costs.

Venture Capitalists though may appear or have short periods of time when they expand the business, probably in order to up the price of a particular unit so it sells better later on. This is were Arriva appears to be going as a list was given by Coach & Bus Week which shows three of the four bidders so far to be Venture Capitalists, including one who own Canary Wharf in London's docklands and no it doesn't been Canary Wharf might get demolished it merely means its an asset in a portfolio.

Keolis who is the only Transport Group to place a bid so far is potentially an outsider, although its recent winning of the Metrolink contract in Manchester might show that the UK is somewhere they want to grow, but outbidding Venture Capitalists and Banks with vast capital resources will be very difficult. This I think is a new phase in the bus and train market and one which given the difficulties and uncertainties that currently exist in the market is probably the most likely outcome.

First have already turned down Apollo's bid for the whole group. No other party have been forthcoming with a bid for the group and Apollo weren't even prepared to up their offer.

It's alright buying the likes of Arriva to break it up & sell off, but who's going to buy up all these assets? There will only be Go ahead & Rotala, Stagecoach will be restricted by existing market dominance and you suggest NX aren't interested, the like of RAPT / Transdev are not really interested in UK expansion on scale, neither are ComfortDelgro. The UK isn't exactly a prime market these days.

There is also interest from asset managers, Arriva Group is a big cash cow and earns good money particularly in Europe, which dwarfs the UK ops. Similar to managing all the occupants of Canary Wharf and re-development to add rents.