Cube in exclusive talks to buy into Veolia Transdev

The French infrastructure fund manager is the frontrunner to buy a minority stake in Veolia Transdev – a global leader in public transportation – from utility Veolia.

Cube Infrastructure, the French infrastructure fund manager, has entered into exclusive negotiations with French utility Veolia to acquire a minority holding in Veolia Transdev, one of the world’s largest public transport operators with about €8 billion in consolidated revenues, sources close to the deal told Infrastructure Investor.

When it announced its annual results for 2011 earlier this month, Veolia said it had “entered into exclusive negotiations with an investor regarding Veolia Transdev,” without disclosing the investor’s identity or how much of its 50 percent stake it would sell.

Industry sources suggested Cube would probably not be able to buy Veolia's entire 50 percent stake in Veolia Transdev, as it only has around €200 million left to spend from its maiden infrastructure vehicle. This would allow Cube to acquire a roughly 20 percent stake in the public transport operator, according to French newspaper Les Echos.

The sale is part of Veolia’s €5 billion asset disposal programme, which is intended to help cut its near-€15 billion debt pile. Veolia Transdev is active in 27 countries and employs 119,000 people. The company was created in 2010 when Veolia and state-backed bank Caisse des Depots et Consignations (CDC) decided to merge their respective transport units – Veolia Transport and Transdev.

For Cube, a stake in Veolia Transdev would beef up its public transportation portfolio. Last February, Cube, together with Italian railway operator Ferrovie dello Stato, closed the acquisition of Arriva Deutschland, Germany’s second-largest private regional transport operator, formerly owned by Deutsche Bahn. The deal, valued at more than €300 million, gave Cube a 49 percent interest in the transport operator.

Then in May 2011, Cube acquired Boreal (then known as Veolia Transport Norway) via a buyout in partnership with Boreal’s management team. Throughout last year, the fund manager also acquired stakes in several other companies including power producers, a telecommunications operator and a mini-hydropower firm, to name a few.

Cube raised its debut, €1.1 billion infrastructure fund with an oversubscribed fundraising in 2010. The fund manager is widely expected to return to market this year to raise a follow-up fund.