Trainline Cancels IPO as Private Equity Firm KKR Buys It


January 23, 2015

The UK-based rail ticket retailer, Trainline, surprised everyone on Thursday went it announced it has cancelled its initial public offering (IPO) plans. The company told that instead of continuing with its flotation aspirations, the private equity firm KKR would acquire it.


Trainline has been able to grow its revenue in the past few months, mainly due to strong performance by its mobile business. According to The Telegraph, the company’s new smartphone and tablet apps have been downloaded over 7.4 million times and attracted an average of 20.8 million visits per month in 2014. Despite a slight increase in revenue, the company’s pre-tax profit fell 9% in 2014, according to the Financial Times.


The company has been looking to roll its service elsewhere in Europe, with negotiations on-going with train operators in Italy and Germany. The company said in a statement that KKR’s involvement would help the company to develop this vision in Europe.


From One Private Equity Firm to Another
The company was already in the hands of private equity. Exponent had bought it in 2006 and had been keen to sell the company in the past few years with no apparent luck. Because the firm hadn’t been able to sell, it had just announced its listing plans at the start of the year.


It also looks like the firm has succeeded in attracting more than its asking price in 2012. According to the Evening Standard, KKR has offered the firm £500 million for Trainline, which is thought to be higher than what the company could have attracted with its IPO. The parties did not close any financial details of the deal, so the price is pure speculation.

Clare Gilmartin, the chief executive of Trainline, was quoted in the Financial Times stating Trainline “has enjoyed great success in the eight years of our partnership with Exponent and we are excited about what the future holds for the company”.


Exponent on the other hand, will continue with its flotation aspirations with another one of its companies, as the firm is set to go ahead with the planned IPO of HSS Hire Group, UK-based tool and hire company.


Growing Trend of Dual Track Process
The recent news doesn’t come as a surprise to experts, as a growing number of companies have been down the, so-called, dual track process. The process means that the company explored both listing and selling routes.


The IPO tends to be the favourable option during the time of high valuations, but market instability has in the previous months caused many companies to scrap their plans. Private equity firms have been rather happy to take the cash through a sale. Some of the most recent examples of switching from an IPO to sale include Carlyle Group’s sale of RAC and the sale of M&M Direct.


Last year was a strong year for IPOs and private equity firms made many exits through public listings. There have already been a few big listings this year, but it remains to be seen whether Trainline will be the start of a bigger trend of going after sales.

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