Rail booking website thetrainline.com is planning to float on the London Stock Exchange with a potential valuation of £500m.
The company, the UK’s biggest online rail ticket site, has previously toyed with the idea of a sale but now aims to raise £75m with an initial public offering next month.
Trainline Investments Holdings is owned by three private equity firms – Exponent, HarbourVest Partners and Northwestern Mutual Life Assurance – who will sell off around 25% of their shares in the IPO. They bought the site in 2006 for £160m from a consortium of train operating companies which set thetrainline.com up as a standalone business in 1999.
It dominates the market for British train ticket sales, with 90% of third-party online bookings and around of a third of all sales including train operators’ own websites.
Clare Gilmartin, Trainline’s chief executive officer, said: “We’re in an era when there is strong structural growth. We sit at the heart of that, we’re a technology company and bring together all of the 22 train comianies and ticket types. We save people money if they book online and in advance and now we’re bringing etickets and mobile tickets to the market: all that leads to an acceleration in sales growth. We’ve seen it in particular over the last quarter – up 16%.”
Revenue from rail ticket sales has increased each year in the UK since 2003 as passenger numbers have increased and fares have risen ahead of inflation. According to industry estimates, the total value of rail fares in 2014 reached £9bn. Official forecasts see more passengers on trains through modal shift in transport and an increasing population, as well as large investment in new track and trains ahead.
The company recorded ticket sales of £978m in 2014, on which it earns a 5% commission, plus it levies a charge of around £1 on bookings. Gilmartin denied that the charge, which is not levied by other websites, was deterring consumers. “Our fees vary. Customers vote with their feet, our share has been accelerating. We deliver things like live travel info and platform information that is tough to find elsewhere, we pull together all of the train companies and are independent so consumers trust us to get the right ticket.”
Gilmartin, a former executive at eBay where she focused on the transition from desktop to mobile, says the new devices, apps and mobile ticketing will drive similar growth.
European expansion will be the next big goal. Trainline has set up an international business focused primarily on rail journeys crossing national borders, with deals in place with Deutschebahn and Trenitalia. But Gilmartin said there is still more growth potential in the UK business, beyond the boost provided by rising passenger numbers and rail fares: “In UK rail, 24% in value terms is bought online which lags behind some European markets, so we see significant upside still in migrating rail spend online.”
