- EQT is weighing a U.S. IPO for First Student and has tapped Goldman Sachs, Morgan Stanley, and RBC, though timing and even pursuing the deal remain undecided.
- EQT bought the North American school-bus leader from FirstGroup in 2021 for about $4.6 billion, and it now runs roughly 46,000 vehicles and nearly a billion student trips a year.
- Growth initiatives center on safety and routing technology plus a push to deploy 30,000 electric buses by 2035, which brings significant capital needs and regulatory sensitivity.
- IPO prospects hinge on market conditions, public-sector contract dynamics, labor and supply constraints, and how investors price a regulated, capital-intensive service business.
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EQT AB is actively exploring strategic options for First Student Inc., including a U.S. IPO, and has selected Goldman Sachs, Morgan Stanley, and Royal Bank of Canada to work on preparations. However, sources emphasize that the IPO is not yet finalized and there remains the possibility that EQT may retain ownership for longer, depending on market conditions and value accretion expectations.
First Student was acquired in mid-2021 from FirstGroup plc for about $4.6 billion. Since then, it has firmly established market leadership in the student transportation sector in North America—serving nearly a billion student journeys annually and managing a fleet of over 40,000 buses. Recent metrics highlight continued operational growth and innovation: in the 2024-25 school year, the company transported 5.5 million students daily across 44 U.S. states and eight Canadian provinces, covering roughly 525 million miles.
Electrification stands out as a major strategic priority. First Student has committed to bringing 30,000 electric buses into service by 2035, and has already surpassed seven million electric vehicle miles driven. Investments are being made in proprietary platforms—such as “HALO” for routing, driver training, fleet maintenance, safety—and in alternative transportation programs aimed at special-needs or hard-to-serve students.
From an investment banking standpoint, the path to IPO will require resolution of several open questions: valuation metrics given discretionary cash flows, regulatory risk (safety, emissions, student welfare), scaling electrification amid capital intensity and supply-chain constraints, labor and driver availability, and sensitivity to public-sector contract renewals. Furthermore, competitive structure favors scale, but customers (school districts, governments) often face budget constraints and political scrutiny.
IPO timing will likely depend on macroeconomic factors—interest rates, macro stability—and buyer appetite for cap-intensive, regulated infrastructure service providers. If successful, First Student could offer public investors access to a large scale annuity-like business with ESG tailwinds and significant barriers to scale for smaller players. But risk of delayed or de-leveraged returns exists, especially if electrification costs or regulatory compliance burden exceeds forecasts.
Supporting Notes
- First Student’s acquisition: EQT bought First Student (and First Transit) from FirstGroup plc in 2021 for an enterprise value of approximately $4.6 billion.
- Dominant market position: First Student completes over 900 million student journeys per year under EQT; fleet size over 40,000 buses; operates in ~1,000 school districts.
- Recent operational scale in 2024-25: 5.5 million students transported daily; ~525 million miles covered; presence in 44 states and 8 Canadian provinces; fleet ~46,000 vehicles; over one billion rides in the full school year.
- Strategic investments: launch of HALO tech platform; First Alt’s growth in serving special populations; First Student’s electric bus usage surpassing seven million miles with goal of 30,000 electric buses by 2035.
- IPO process status: Working with Goldman Sachs, Morgan Stanley, RBC as underwriters; discussions with advisers are early; may issue RFP in coming months; possibility of delaying IPO or retaining ownership.
- Risks and constraints: High capital intensity for electric buses (up to 4x cost of diesel buses); school-district contract dependency; regulatory and safety compliance; public funding volatility.