Renfe authorized to acquire 50 per cent of Czech operator Leo-Express
Renfe has acquired 50 per cent of the capital of the private Czech company Leo Express. The operation, which has been authorised by the Ministry of Finance, is a strategic business opportunity for Renfe.
Months after its first announcement, Renfe has acquired 50 per cent of the capital of the Czech railway operator Leo Express, which operates services in different Central European countries. It will allow the Spanish public operator to operate in the Czech Republic, Slovakia and Poland, and to have the resources and licences to access the German market. Renfe has acquired 50 per cent of the capital of the Czech railway company Leo Express, which operates services in various Central European countries.
The operation, which has been authorised by the Ministry of Finance and is part of the Spanish operator’s internationalisation process, represents a strategic business opportunity for Renfe, which is seeking to establish alliances and open up new business channels outside the domestic market. The investment and shareholder agreements signed between the Spanish and Czech companies contemplate a 50 per cent capital increase in Leo Express, which is assumed by Renfe.
Third largest Czech operator
Leo-Express is the smallest of the three long-distance operators in the Czech Republic, together with Ceske drahy and the private operator RegioJet. These operators are for example present on the Prague-Ostrava route. The company began operating in 2012 in the Czech Republic, and since then, it has been developing its business by extending its services to countries such as Slovakia and Poland, as well as with the awarding of PSO tenders in the Czech Republic itself, which is one of the areas where it is seeking to grow. In Germany, since 2017, they have been operating a long-distance Open Access service between Berlin and Stuttgart for FlixTrain.
Also, with the aim of feeding its rail services through train-bus intermodality, Leo Express has operated various road connections in the Czech Republic, Slovakia, Austria, Poland and Ukraine. Currently, due to the COVID-19 crisis, they are limited to operating rail services in the Czech Republic, Slovakia and Poland.
Internationalisation of Renfe
The entry of Renfe as a main shareholder in Leo Express has a direct benefit for the Spanish company, such as having activity in three more European countries (Czech Republic, Slovakia and Poland) and having the resources and licences to access the German market.
Likewise, it allows immediate access to PSO tenders in Germany, the Czech Republic and Poland, with local implementation capacity, experience, equipment or references in these countries, which are often essential to be able to bid.
Renfe would also be better positioned to access the high-speed projects planned in the region. The Czech Republic, Slovakia and Poland are three countries that still have a lot of potential for the development of their transport infrastructures.
Moreover, Renfe’s landing in Central and Eastern Europe could have a knock-on effect, facilitating the growth of the international activity of other Spanish companies, especially those related to the railway industry.
The internationalisation of public companies is now becoming the norm, at least for the larger ones. Trenitalia has ambitions with Thello in France and ILSA in Spain (2022). SNCF has already started its internationalisation by opening a Ouigo high speed service in Spain, between Madrid and Barcelona.
