Deutsche Bahn to explore options to divest UK rail and bus operator Arriva. Credit: Niels Karsdorp, Dh3201.

German rail operator Deutsche Bahn is set to start exploring options to sell its UK-based wholly-owned subsidiary Arriva.

Headquartered in Sunderland, Arriva operates bus and rail services in Europe. It was acquired by Deutsche Bahn for £1.59bn in 2010.

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The divestment will enable Deutsche Bahn to reduce its debt while also giving Arriva monetary resources to expand its operations.

In a statement, Deutsche Bahn said: “The Supervisory Board instructed the Management Board today to assess the option of selling up to 100% of the shares in Arriva to one or more investors and the option of an IPO.

“The options for a sale of Arriva would help to limit the increase in DB’s debt, while also putting Arriva in a position to generate further financial opportunities.”

“As DB reported, the options for a sale of Arriva would help to limit the increase in DB’s debt, while also putting Arriva in a position to generate further financial opportunities for growth.”

Arriva currently manages bus and train services across 14 countries in Europe. It also owns Grand Central, an open-access operator of train services in the UK, which runs trains between Sunderland and London.

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The company posted revenues of €5.44bn (£4.62bn) last year and has a workforce of approximately 53,000 staff across Europe.

Deutsche Bahn said that a decision on whether to go ahead with the sale of Arriva is likely to be made in September this year. Recently, media sources reported that the Government of Germany is planning to spend approximately $57bn through Deutsche Bahn to modernise the national rail network over the next decade.

In February, Deutsche Bahn announced that it will invest $12.1bn this year to modernise the railway network across Germany.