Posted 19th October 2023 | 1 Comment

German railway sells Arriva to US-based investor

The Arriva Group has been sold by German state-owned train operator Deutsche Bahn to the American transport investor I Squared Capital. The value of the sale has not been disclosed, but it is reported to be around £1.4 billion.

DB bought the British company Arriva from its shareholders in 2010, after it had been founded as leasing company Cowie in north east England in 1938. Cowie entered the bus market in the 1980s as a result of deregulation and privatisation.

Arriva owns the Department for Transport contract to run CrossCountry, which has just been renewed and started on Sunday. It also has the Chiltern Railways contract, open-access Grand Central and a number of bus companies.

The Group has been running trains in Britain since early 2000, when it acquired first-generation franchise holder MTL Group. DB had been trying to sell Arriva for some time to raise cash, but reported interest from FirstGroup came to nothing.

Deutsche Bahn’s CFO Dr Levin Holle said: ‘We are happy that I Squared is willing to support Arriva in its future growth.  Arriva has good prospects for sustainable growth as market liberalisation in Europe progresses. The strategic goal of Deutsche Bahn is to make record level investments in environmentally friendly rail in our core business, combined with the massive increase of investment of the German Federal Government into our German rail infrastructure. The purchase agreement signed today is therefore in the spirit of Strong Rail. At the same time, the sale to I Squared will give Arriva new options to support its growth potential, for example for the future electrification of European fleets. For us, the agreed sale is an important step to focus even more on additional growth in rail transport in Germany.’

I Squared invests in transport, logistics, energy, utilities, and digital infrastructure. The firm said it ‘is committed to creating sustainable, long-term growth across its portfolio, supporting management teams in improving operational performance, and investing to support the energy transition with lower-carbon infrastructure’.

Managing partner Gautam Bhandan said: ‘Transport accounts for around one-fifth of global CO₂ emissions. Three-quarters of this is from road transport, and a greener public transport sector is critical to the shift to lower-carbon infrastructure. 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. We are excited to work with Arriva and we will invest to support its future growth as a major European bus and rail operator.’

Arriva Group Mike Cooper added: ‘We want to see a future where people choose to leave their car at home, a future with less traffic congestion and cleaner air. This transaction marks an exciting next stage for us, and will deliver significant benefits for our colleagues, our passengers and the many Passenger Transport Authorities we partner with across Europe, enabling us to play our role in delivering a better future.’

The sale of Arriva should be completed next year, so long as closing conditions and approvals are agreed.

Reader Comments:

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  • david C smith, Bletchley

    Cross - Country have a somewhat poor reputation with its users, with too few seats on offer being a leading complaint. I have heard it said that XCountry had been prevented from expanding number of seats ( longer consists ?) by DfT, but that is just "hearsay".

    So, let's hope we might see some useful initiatives come from this new owner.

    At present, XC are effectively constrained to the Manchester / Newcastle to Bristol / Bournemouth regular interval "corridors". It would be useful for there to be,in addition, some once / twice a day trains giving through service for otherwise "difficult" journeys.