Trainline Tracks Float Despite Tech Wobble

Britain's biggest online rail booking operation is on track for a stock market flotation despite disappointment over the performance of technology listings in London so far this year.

Sky News understands that the owner of Trainline has kicked off discussions with banks about an initial public offering (IPO) that could value the company at in excess of £400m.

Exponent Private Equity, which has held a controlling stake in Trainline since 2006, is expected to appoint City advisers to oversee a flotation within weeks, although the timing of any listing is uncertain and an outright sale to another investor is a possibility, sources said.

A flotation would provide a further test of investors' appetite for shares in technology companies following a mixed reception for a spate of technology debuts in recent months.

Businesses such as AO World, a digital channel for white goods sales, and Just Eat, an online takeaway service, attracted strong demand ahead of their listings but both have traded down since going public.

Trainline's recent performance has been strong, and Exponent (NasdaqGS: EXPO - news) is understood to believe it possesses a sufficiently visible growth profile to reassure prospective investors.

It made around £9m in profit in the year to March 2013, despite having to pay £2m in fees to advisers who led an unsuccessful sale process.

The business, which handles ticket sales for the majority of UK rail operating companies, added two million customers in the year to March and has seen its digital app downloaded more than six million times since its launch.

The company also said that its site was the most popular travel app on iPhone and Android devices.

In an attempt to drive the shift to mobile usage of its site, Trainline reshuffled its top management earlier this month, recruiting Clare Gilmartin, a former eBay manager, as its new chief executive.

Murray Hennessy became deputy chairman following Ms Gilmartin's appointment.

Established in 1999, Trainline was bought by Exponent for about £160m from a consortium which included Virgin, Stagecoach and National Express (LSE: NEX.L - news) .

A previous attempt to sell the business in 2012 collapsed when bidders including Priceline.com, the US-based bookings site, and a Canadian pension fund declined to meet the owner's asking price.

Exponent subsequently paid itself a multimillion pound dividend from Trainline as part of a £190m refinancing.

The company faced a sudden loss of revenue in 2012 when the Department for Transport (DfT) decided to strip Virgin Trains of the West Coast mainline franchise and award it to FirstGroup (LSE: FGP.L - news) .

However, that decision was overturned after embarrassing flaws in the bidding process were exposed, triggering an overhaul of the entire rail franchising system.

Last week, Virgin won a further two-year extension to run the line, one of the UK's most lucrative, prompting Sir Richard Branson to pledge to bid again for the next licence period.

As well as its own website, Trainline's runs digital sales operations for the majority of train operating companies and has expanded overseas, serving major companies and travel agents as clients.

Exponent and Trainline declined to comment on Sunday.