The world's largest bus company, Stagecoach Holdings, is to invest $1.39 billion for a potential 28 per cent stake in Hong Kong-listed mainland toll-road investor Road King Infrastructure, the first British company to gain access to the mainland's lucrative toll-road sector.
Stagecoach - which failed in its bid for a bus franchise in Hong Kong in March - will initially buy 109 million shares, or a 20 per cent stake, in Road King for about $872 million from American International Group's Asian Infrastructure Fund.
It will also take up convertible - but non-redeemable - preference shares issued by Road King worth $518 million, which can be converted into 60.5 million ordinary shares in two to five years.
If fully converted, Stagecoach would increase its holding to 28 per cent of Road King's enlarged issued share capital.
Stagecoach chairman Brian Souter said the deal represented 'the first UK transport group to get into toll roads', allowing the company to broaden its interests away from aviation, railways and buses.
Marking its first foray into the mainland, the company could secure a stable income source and take advantage of the opportunity to provide transport facilities such as bus services, Mr Souter said.