Waikato's most outstanding Maori business fund is set to add Go Bus to its burgeoning portfolio of assets.
Tainui Group Holdings (TGH), together with Christchurch-based Ngai Tahu Holdings Corporation (NTHC), will buy Australian-owned New Zealand bus operator Go Bus for $170 million.
The service will be conditionally bought from Sydney-based private equity firm Next Capital.
NTHC is the majority investor with a two-thirds stake and TGH has the remainder. The purchase is due for completion at the end of September.
Go Bus operates urban, school and charter bus services throughout New Zealand, with leading market positions in Hamilton, Napier, Tauranga and Christchurch.
Tainui Group chief executive Mike Pohio said Go Bus had a strong regional presence and was well-placed to grow.
"When it comes to size and scale of businesses, we look at where we can bring things to the table."
Pohio said Tainui Group Holdings was looking to diversify its investment portfolio.
TGH is the financial arm of Waikato-Tainui. In July, Waikato Times reported Waikato-Tainui's total assets had grown by $133m over the past year to $1.1 billion.
The iwi's assets include land developments such as Te Awa-The Base, a residential development in Huntington, and business investments like the Novotel Tainui and Ibis Tainui hotels, Waikato Milking Systems, and Genesis Energy.
Pohio said the joint deal "fits nicely" into an investment deal signed with Ngai Tahu in 2007.
Go Bus employs Waikato Tainui people and was an "environmentally friendly service".
"We will target growth where it makes sense [with a focus on] more jobs, stronger returns and better service provision."
Pohio said TGH would look for opportunities for growth, and support management in doing this where possible. "There are aspects about this business that are local and it has a good local presence.We are here to support Go Bus management to make this an even better company then it is."
Ngai Tahu Holdings chief executive Mike Sang said Go Bus was a well-run business.
"Go Bus will enable us to further grow and diversify our portfolio in a way that is complementary to the rest of our investments," he said.
Go Bus chief executive Calum Haslop said both iwi were a natural partner for the business.
Waikato Regional Council chairwoman Paula Southgate said the council, which has a contact with the Go Bus service, would have conversations with Go Bus management in light of the new owners.
"The only thing we would concern ourselves with is the level of quality, but Go Bus has assured us the business will be run as per the same standard."
Southgate said there was no reason the service would not continue to run "as well as it had".
"I imagine TGH and Ngai Tahu would have the vision to run a top service for the district.
"We look forward to working with the new owners of Go Bus to bring about continual improvement."
In January, Go Bus rolled out 10 advanced buses to provide easier access to people with special needs.
"On the whole, there has been positive changes and we have only seen improvements in the service."
NTHC and TGH were the underbidders on Transpacific's New Zealand waste-management business that was sold in March to Beijing Capital Group for $950m.
In June, Waikato Milking Systems, New Zealand's biggest manufacturer and designer of milking systems, with an annual turnover of $100m, was acquired by the two iwi and Pioneer Capital.
Westpac is financing the Maori funds' bid for Go Bus.
Go Bus was part of Next Capital's second fund, which also held stakes in recent divestments including Discovery Parks and Aero-Care.
Next Capital, run by John White, Sandy Lockhart and Patrick Elliott, bought an 86.8 per cent shareholding in Go Bus in May 2012.
The agreement remained conditional until September 30, Pohio said.
- Waikato Times