Thanks for the heads up @DalyWaters.This AFR article from Street...

Thanks for the heads up @DalyWaters.
This AFR article from Street Talk provides some further insights:

Vic bus bigwig Ventura lures offshore bidders despite contract risk

Victoria’s biggest bus operator Ventura Groupis understood to be fielding interest from at least two overseas bidders,despite questions raised around its ability to retain juicy governmentcontracts come 2028.

Street Talk understands Singapore-listedKeppel Infrastructure Holdings and Spanish bus operator Mobility ADO were amongparties shortlisted after sell-side adviser Goldman Sachs collected non-bindingindicative bids on August 25.

Mobility ADO, in particular, may be motivatedgiven its perennial underbidder status in recent Australian and Kiwi busauctions. It lost out to OPTrust’s Kinetic at both Queensland’s TransitAustralia Group (TAG) in 2019 and Next Capital’s NZ Bus last year.

The other shortlisted suitor, Keppel, ownslocal chemicals business Ixom, which was put on the auction block last year butended up doing a $1 billion refinancing after its sale stalled. Keppel was also in the final furlong at New Zealand’s Vector Metering, which ultimately sold a 50 per cent stake to QIC at at $NZ2.5 billion enterprise valuation.

The bidder interest – and sources suggested tothis column that a financial sponsor was also in the mix – may have prompted acollective sigh of relief from Ventura and its advisers. That’s because a keytalking point since Goldman was appointed has been the 99-year-old business’sability to retain its earnings and/or margins five years from now.

A significant slice of Ventura’s contracts –which are with the Victorian Government and helped the business make about $300million revenue and $80 million earnings annually – are up for renewal in 2028.

Neither meek, nor mild

Hitherto a meek client, the Victorian Government recentlychanged rules for how it hands out bus contracts. Sources said the new regimeis likely to see a fiercer tender process, leaving Ventura in a position whereit would have to defend its bread-and-butter business from rivals likeComfortDelGro and Kelsian. That could affect both its earnings and 25 per centEBITDA margins, they said.

Of course, it’s nothing unusual for prospective buyers toamplify a target’s shortcomings, and Keppel and Mobility’s arrival showsthere’s credible interest in the asset. The question is, at what price.

Street Talk understands Pacific Equity Partners was partneringwith ComfortDelGro, and Kinetic took a look. Kelsian, which already has an 8per cent market share in Melbourne, is understood to be weighing whether growthvia M&A makes sense or if it can expand by winning contracts. PEP/CDG andKinetic did not make it through to the second round, sources said.

Private equity giant KKR, which bought New Zealand bus groupRitchies in 2021, was seen as a logical suitor but is understood to haveskipped on the auction.

Ventura is the largest bus operator in Victoria with around 530of Melbourne’s 1205 total routes. It has 44 per cent market share of theMelbourne public bus market, and 55 per cent of school routes in the city,holding three of the five largest bus contracts.