Avanza Group and Francisco Larrea, two of the long-established operators in Madrid’s scheduled passenger transport sector, have joined forces to submit a joint bid in the major public tender launched by the regional government for the renewal of interurban bus concessions. Over its 10-year duration, the contract is expected to generate approximately €8 billion in revenue, making it the largest of its kind in the European Union.
The agreement between Avanza and Francisco Larrea is limited to the Madrid tender and specifically targets one of the most attractive lots, CM66. This lot covers connections between the capital and various municipalities in the Sierra de Madrid, including Alpedrete, Collado Villalba, Guadarrama, Majadahonda, Navacerrada, Las Rozas, Torrelodones, and Tres Cantos. It is a concession with an estimated demand of around 14 million trips per year, associated revenues of over €600 million, cumulative EBITDA of approximately €70 million over the period, and net profit of around €22 million, implying a profitability close to 9%.
In return, the winning operators will be required to assume the transfer of existing staff and rolling stock, as well as make new investments in low- or zero-emission fleets.
In this context, Francisco Larrea, advised by NORGESTION, has thoroughly assessed its strategic options and has ultimately opted for this partnership with Avanza, ruling out other alternatives such as bringing in new equity partners.
The Francisco Larrea Group, founded in 1929, currently operates the regular interurban service connecting Madrid with several municipalities in the Northwest Sierra, such as Moralzarzal, Mataelpino, El Boalo, Cerceda, and Collado Villalba, carrying around five million passengers annually. The company reports annual revenues of approximately €19 million and operating profit (EBIT) of around €7.5 million in the last fiscal year.
The tender launched by the Community of Madrid has been divided into 21 lots and has attracted the interest of major national and international mobility groups.
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