Private equity involvement in Public Transport Services: a critical global review

David Hall, Vera Weghmann and Al-Hassan Adam

No 54314, Greenwich Papers in Political Economy from University of Greenwich, Greenwich Political Economy Research Centre

Abstract: Private Equity is not the only problem. Privatisation creates downward pressure on jobs and pay and standards of service, upward pressure on fares and prices, and undermines democratic accountability and planning, whether the private companies are owned by multinationals, or local firms, - or private equity (PE) groups. PE’s distinct features - debt-financed acquisitions, rapid profit extraction and exits - do encourage more aggressive reduction of costs, cutting employment by 4% compared with other forms of ownership, and undermining services. PE’s separation of investors from companies obscures ownership and responsibility. Its global growth has levelled off, and it is finding exits more difficult, which may increase pressure for higher returns. Direct provision of public transport services by public sector remains the dominant form of ownership globally, but privatisations of are growing, with the usual damaging consequences, led by groups based in France and the UK, including some owned by PE. Projects under China’s Belt and Road Initiative (BRI) are often similar to PPPs, dominated by Chinese state-owned construction firms, but there is no PE presence. PE is now entering public transport not only through privatisation of operations but also through other parts of the supply chain. This involves some of the biggest PE groups in the world, but also smaller national-based PE firms. The biggest area is leasing of electric trains and buses, where there is a big growth in demand due to climate change policies. Leasing can be used to extract continuing high profits, which puts pressure on labour costs and fares of actual operations, as well as destroying crucial public sector capacity and skills in maintaining and designing e-buses and trains. International financial institutions (IFIs) such as the World Bank Group, and national development financial institutions (DFIs), play a key role in promoting and participating in PE investment in e-bus programmes, and railways, port and airports construction. They also channel development and climate funds through PPPs to ensure that they support private companies, including PE firms, using public and development finance to guarantee investor returns. Public ownership remains a better and more cost-effective option, not only for operation but also investment in new systems, e-buses etc. Successful public-led cases, such as Madrid’s metro system, achieve world-class outcomes through in-house expertise, public ownership, and finance, demonstrating the power of public economics which outperforms privatised approaches. Unions, social movements and progressive political parties should continue to prioritise resistance to privatisation of transport services at local, national and international level, and resistance to all forms of PPPs and blended finance. This should include pressure on IFIs and DFIs to channel financial support to public sector, and also targeting PE as a particularly damaging and anti-democratic form of privatisation, but not as the main issue. Campaigns should also address the problem of leasing, calling for governments to support e-bus and e-locomotive purchases through cost-effective and accountable public finance mechanisms, combined with local manufacturing of these vehicles. The whole sector and supply chain should become a focus for national economic policy to develop sustainable skilled employment in socially useful production. In addition, wherever privatisation exists, there should be demands to eliminate public subsidies or guarantees to private operators or leasers, and to limit the extraction of dividends and interest payments.

Keywords: private equity; public transport; China; electric buses; electric trains (search for similar items in EconPapers)
Date: 2026-05-22
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