Kinetic looks to buy NZ Bus to become Australasia’s largest e-bus operator

Australasian bus operator Kinetic is seeking clearance to purchase NZ Bus and become the largest operator of battery electric buses in the region and one of the largest globally. 

The Commerce Commission has received a clearance application from Kinetic to acquire 100% of NZ Bus and its subsidiaries. 

NZ Bus has over 1400 staff and 800 buses and 14 depots adding to Kinetic’s 5800 staff, 3800 buses and 83 depots across Australia and New Zealand. 

While NZ Bus holds key government contracts to operate public bus services across Auckland, Wellington and Tauranga, it is majority owned by Australian private equity firm Next Capital which has more than $600 million of funds under management. 

Kinetic says the investment will allow it to diversify its New Zealand operation, which includes Go Bus urban and school bus services, SkyBus and Johnston’s, and significantly expand its footprint across the country’s two biggest urban markets, Auckland and Wellington. 

Kinetic says the proposed acquisition will only overlap in the supply of urban bus services in the Auckland region.

Under Kinetic ownership, NZ Bus will deliver at least 200 electric buses as part of its contracts in Auckland and Wellington with substantial investment made in depot conversion and electric charging infrastructure. 

Last year Auckland Transport announced the region’s largest electric bus order in partnership with NZ Bus.  

Through Go Bus, Kinetic already operates a fleet of 35 e-buses across Christchurch and Auckland. The company is also introducing the first of 36 new battery electric buses in Melbourne in partnership with the Victorian Government. 

By June, an additional 20 e-buses will be delivered into Kinetic’s Queensland Government contracted services. 

Kinetic co-chief executive Michael Sewards says NZ Bus represents an investment opportunity strongly aligned to Kinetic’s strategic vision. 

“Our sustainability targets are bold and clear as we aim to have 50% of our fleet comprised of zero emission vehicles by 2030,” he says.

“In our experience, New Zealand is leading the charge on the global stage in the transition to zero emission busing, as demand for public transport grows and bus transportation is recognised as an increasingly popular mode of sustainable transport.” 

NZ Bus chief executive Barry Hinkley is also backing the deal. 

“NZ Bus has been transformed in recent years through the effort and dedication of an extraordinary team of people, from the senior leadership group through to hard-working drivers and workshop employees. 

“Operating closely with our key customers we have solidified NZ Bus’ leading position in the industry, a position that will be enhanced with the proposed merger with Kinetic’s Australasian business,” Hinkley says. 

Global electric bus adoption

There are currently around 600,000 e-buses on the road globally, representing 39% of new sales and 16% of the global fleet, according to Bloomberg New Energy Finance (BNEF) research. 

China accounted for the majority of all e-bus sales in 2020, with more than 74,000 units sold, and continues to account for 98% of the global e-bus fleet.

It’s expected China’s global share of e-buses will decrease in the next few years as adoption picks up in Europe, North America, South Korea, South East Asia, India and South America.

By 2025, e-bus sales outside of China are expected to hit 14,000, up from 5000 in 2020. Buses and two-and three-wheelers are the biggest near-term opportunity for electrification in emerging economies, according to BNEF. 

Meanwhile, the European Union has set minimum requirements for purchasing new zero emission public buses (battery electric and fuel cell electric) in member states, which differ across the continent. In most Western European countries, a minimum share of 22.5% should be zero emission by 2025, rising to 32.5% by 2030.