Infrastructure Capital Group is pleased to announce the completion of its investment in Kinetic, Australasia’s largest, and most diversified bus operator. The investment has been led by its Diversified Infrastructure Trust (“DIT”).
Kinetic operates more than 147 bus services, across 15 cities, supported by a fleet of over 3,050 buses operating from a network of 56 strategically located transport depots. The business provides long-term contracted bus services across urban and regional routes, general commercial services, and airport bus services.
The Victorian Government this week announced Kinetic was awarded the contract to operate the Melbourne Bus Franchise, a 9.5 year $2.2b contract representing 30% of Melbourne’s bus network with 600 buses and a further 1100 employees. As part of the contract, 36 electric buses and a further 300 hybrid vehicles will service metropolitan Melbourne.
ICG’s investment in Kinetic typifies its focus on sustainability, with bus transportation recognised as an increasingly popular mode of sustainable transport. Kinetic’s ESG strategy is central to its business model, with the business growing what will be the largest electric bus fleet across the region, comprising nine electric buses already in operation in NZ and 25 more arriving before the end of the year. At least 35 electric buses will also arrive in Australia over the next 12 months. It aims to have 50% of its fleet comprised zero emission vehicles by 2030.
Kinetic also places significant emphasis on its people and on gender equality. It is working towards having at least 50% female drivers across its fleet by 2030, at least 50% women in managerial positions by 2025, as well as indigenous employment parity targets.
The investment in Kinetic aligns with Diversified Infrastructure Trust’s strategy to invest in mid-market infrastructure assets, providing stable, predictable cashflows. The Kinetic business is supported by long-term government contracts, supported by critical asset ownership with the majority of its income earned on an ‘availability’ basis.
Kinetic is positioned to benefit from supportive underlying demographics and continued growth, with Australian demand for public transport having grown by 24% over the past ten years, compared with only 8% for private vehicles.
Commenting on ICG’s investment in Kinetic, Tom Laidlaw, Managing Director of ICG, said:
“This is a unique opportunity to work alongside Kinetic’s exceptional management team and OP Trust as the company continues to scale this market-leading transport platform to meet the growing demand for public transport. With high population growth, increased urbanisation and reduced car ownership in major cities, public transport is an essential, safe and affordable service for our communities.
“With its irreplaceable network of strategically located transport hubs and it’s large scale, modern fleet of buses, Kinetic is a critical partner to government and the community to provide these services under long term contracts.”
Michael Sewards, Co-CEO of Kinetic, commented:
“Kinetic’s long-term goal is to provide fully integrated, multi-modal, mass-transit services across Australasia and we’re delighted to welcome ICG as a key investor. We are excited to have ICG joining OPTrust to help fund Kinetic’s next stage of growth.
“Not only does demand for public transport continue to grow but we see an exciting opportunity to take a lead role in Australasia’s shift towards fully sustainable urban and regional transit routes.”
Stan Kolenc, Chairman of Kinetic and Managing Director of OPTrust, commented:
“Over the past five years, Kinetic and OPTrust have built the Kinetic platform from a single route to Australasia’s largest private bus operator. The business has invested heavily to reach a scale that allows it to operate efficiently and offer a high quality of service and engagement to its customers and stakeholders. Looking forward, Kinetic has a significant pipeline of attractive organic and acquisition opportunities which have reached a stage where Kinetic requires a like-minded partner with deep infrastructure expertise and a vision that is aligned with Kinetic’s long term sustainable growth strategy.
“We have found that partner in ICG and welcome them as a shareholder in Kinetic, and look forward to working together to continue to grow our business.”
Kinetic continues to lead the growth and consolidation in bus transport across Australia and New Zealand, having in the last six months acquired Queensland’s largest resources bus operator, Greyhound Resources, and Tasmania’s largest Government contracted bus operator Tasmanian Redline . Greyhound Resources operates in the Bowen Basic, Hunter Valley, Olympic Dam and Darwin with key clients including BHP, Anglo American and Conoco Phillips.
With operations across NSW, Victoria, Queensland, South Australia, Tasmania, and New Zealand, Kinetic is well placed to service the growing demands for bus services with major government counterparties including Department of Transport and Main Roads (QLD), Transport for NSW (NSW), Department of Transport (VIC), Auckland Transport and Canterbury Regional Council.
 Bureau of Infrastructure Transport and Regional Economics 2018, Yearbook 2018 – Australian Infrastructure Statistics, Bureau of Infrastructure Transport and Regional Economics