Forest Coach Lines
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In December 2014, Next Capital executed a management buy-out of Forest Coach Lines in conjunction with its CEO, David Royle.

Forest is a leading, private, scheduled and charter bus operator, which has been operated on Sydney’s north shore by the Royle family since the 1930’s. The business consistently delivers industry leading customer service outcomes and its medium term performance is underwritten by a contract with the NSW government’s transport department.

The Australian bus industry is viewed as an attractive sector for a well-capitalised and efficient operator, given:

  • The nature of the long-term, government-backed contracts;
  • The long-term underlying demand growth associated with a modal shift to public transport, population and employment growth;
  • The increasing reliance of government authorities on private operators and the associated pipeline of tender opportunities; and
  • The highly fragmented industry ownership base, providing a material inorganic opportunity set.

Forest’s strategy will be to drive organic earnings growth from its core region, whilst building a broader business through acquiring and tendering across Australia.
Investment highlights include:

  • Strong existing earnings streams
  • Material barriers to entry
  • Multiple growth opportunities
  • Strong, scalable management capability
  • Strong return potential with downside support