Online travel platform Trainline (TRN) met with a positive reception in Main Market debut dealings this morning, the shares steaming ahead by 20.4% to 421.4p, having been priced in the initial public offering (IPO) at 350p.
This was at the upper end of expectations, demonstrating clear investor appetite for scalable, digital platform businesses. While the train and bus ticket seller’s stock market debut hasn’t attracted the same fanfare as a high profile US IPO such as an Uber, Slack or Beyond Meat, Trainline has clearly created a technology that consumers need, monetises its platform and makes a profit.
WHAT IS TRAINLINE?
Founded in 1997, Trainline sells rail and coach tickets to millions of travellers worldwide via its website and mobile app. The platform brings together millions of routes, fares and journey times from 220 rail and coach carriers across 45 countries, mainly in Europe but also in Asia.
Trainline’s app provides customers with unique, AI driven travel information in real time for every stage of their journey, with access to live departure boards, live journey trackers and personalised journey delay and disruption information as they travel.
Private equity behemoth KKR will keep a 35% stake in the business, assuming all the shares offered in the float are taken up. Trainline will use the £110m of new money raked in via the IPO to raise its profile and tap into the growing demand for e-ticketed travel.
The company operates in global long-distance rail and coach markets estimated to be worth more than €225bn per year and benefits from secular tailwinds including government investment in infrastructure and capacity, shifting consumer habits towards more environmentally-friendly forms of travel and a shift from offline to online and eTicketing.
For the year ended 28 February 2019, Trainline generated net ticket sales (representing the gross value of ticket sales minus refunds issued to customers) of £3.2bn, up from £2.68bn the previous year, while adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) grew 72% to the best part of £53m.
Chief executive officer (CEO) Clare Gilmartin, the former eBay executive who has steered Trainline’s rapid growth since 2014, insists ‘we are uniquely positioned to capitalise on the vast opportunity ahead and accelerate our expansion for the benefit of our customers, our train and coach company partners and our shareholders’.
THE EXPERT’S VIEW
Russ Mould, investment director at AJ Bell, comments: ‘Trainline is an easy proposition to understand. Its system aggregates millions of routes, fares and journey times from 220 rail and coach carriers across 45 countries, giving consumers an easy way to book their travel tickets.
‘It isn’t the cheapest ticket seller in the UK when you take into account fees - the big train companies will sell you a ticket with no fees at all, for example. However, the convenience factor means a large number of travelers are happy to use Trainline for all their transportation booking.’
Mould also points out that ‘the business was previously scheduled to float on the UK stock market in 2015 but was snapped up by private equity firm KKR at the eleventh hour for approximately £450m. A year later Trainline bought French rival Capital Train.
‘Investors should always be slightly careful about former private equity-owned businesses that arrive on the stock market as many of them have suffered from under-investment and are weighed down by excessive amounts of debt.’
