Can you Bank on Re-reg?

“I think it is probably the most significant development we’ve seen in the market for the past few years.” So said Brian Souter, on the sale of Stagecoach London to Macquarie Bank.

Transit trade journal reports that the Macquarie deal may signal a new direction for the English bus industry – where financial institutions and private equity investors are paying attention to buses. Yes, humble buses. Souter felt other investment banks were showing “strong interest” in the sector. Could passenger transport groups follow air- and sea-ports out of existence? Is there a new era just one stop away? Especially if, like Macquarie, they have big cheques ready to sign?

Certainly, Souter feels things are about to change – and the industry had better listen! Omnibuses’ take a slightly different perspective, though. If the large financial institutions are coming, what happens to the re-regulation debate, currently in its third year? Could it influence the debate?

Of all the businesses in Britain, banks are perhaps the most risk-averse. More than anything, banks like certainty. Macquarie gets certainty from its Stagecoach London deal – in a totally regulated régime. Such a regimen delivers growth at low risk.

The rest of Britain is far from regulated. There’s only certainty within a 56-day notice period. Under pressure from the PTEs and others, the government is looking at the whole re-regulation debate and we can expect an answer in the new year if, that is, you believe the junior minister who gave a statement to the recent Commons’ transport committee recently.

This response no doubt pleased the PTEs. The Big Five groups may have been less happy as they argue that deregulation provides ample opportunity to grow markets across Britain, citing many examples outside the PTEs.

It’s just conceivable that the Big Five may be persuaded to change their minds if there are big investors willing to queue up with good offers – after Stagecoach London, they all saw their shares increase in value.

Omnibuses feels that it’s unlikely to happen but Macquarie might tip the operators into a different view of whether the industry should accept re-regulation. You heard it here first! After all, if Radio 5 Live can spend much of its airtime speculating, we can indulge in a little!