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Trainline on track for £400m flotation following valuation

THE private equity owners of Trainline, the rail booking system created by Virgin and Stagecoach, are lining up a £400 million flotation, reports have suggested.

Exponent Private Equity first began a sale process in late 2010 when it was said to be hoping for a £500m sale or flotation. But the process only began in February 2012 and five months later was aborted after attracting a highest bid of only £250m, it was reported.

Now a £400m valuation is being touted as the hoped-for price in a possible flotation.

Trainline sells tickets under licence from ATOC, the 24 operators which make up the Association of Train Operating Companies, but whereas buying tickets through train company websites is free, Trainline deploys TV advertising and charges fees.

The reports say Exponent, which also owns Quorn Foods, is expected to appoint advisers for the float in the next few weeks.

Virgin created the business in 1999, and by 2006 it was operating websites for 16 train operating companies as well as a business travel service. Under pressure from the ATOC to divest, Virgin sold it to Exponent for £163m in 2006 after a 12-bid auction. Stagecoach, which owns 49 per cent of Virgin Rail, booked a £5.4m profit from its stake in the disposal in 2007.

The final bidders two years ago were said to have included KKR and Francisco Partners. Yesterday it was suggested the two final bidders were Priceline.com, a US-based bookings site, and a Canadian pension fund. The highest bid was believed to have been around £250m, which banking sources at the time "didn't reflect shareholders' view of thetrainline's future growth prospects".

In its annual report, Trainline Investment Holdings said ticket sales rose by 6.45 per cent to £1.4 billion in the year to March 2013, from £1.3bn in 2012 and £1.1bn in 201. It reported 90 per cent growth in sales via mobile phone, which were however less profitable.

The pre-tax loss narrowed to £1m from the £6.2m of the previous year, despite a £2.1m hit from advisory fees in the aborted sale process. There was also a £5.5m book loss (and £1.4m of fees) from the disposal of a smartcard business. The accounts showed shareholder funds of £12.9m in 2012 reversing to a negative £4.5m in 2013.

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