Bus firm's $466 million deal allows growth in Pearl River delta
Kowloon Motor Bus Holdings (KMB) will take a stake in Shenzhen's dominant public transport company in a deal which will see the two firms expand into southern China and prepare for a possible listing.
Hong Kong's largest franchised bus firm will pay 497.6 million yuan (HK$466.35 million) for 35 per cent of Shenzhen Public Transportation. The two companies signed a principle agreement yesterday, the first step to setting up a Sino-foreign joint venture.
The joint venture will inherit the state-owned firm's transport assets while KMB will supply cash. The company plans to expand its fleet size, push into other cities in southern China and take steps to list, according to KMB executive director Winnie Ng Wing-mui.
This is the second deal in the past two months to come from five assets the Shenzhen municipal government has put up for sale to foreign investors. In July, Hong Kong and China Gas bought 30 per cent of Shenzhen Gas for 271.5 million yuan.
The Shenzhen deal will open up new roads to KMB. Confronted by competition from railways and a public call for fare cuts, the franchised bus service provider is seeking growth in the rapidly growing Pearl River delta.