Trainline: A Recent IPO That Should Be Avoided On Valuation Concerns And A Complete Exit From Existing Shareholders

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About: Trainline Plc. (TNLIF), Includes: KKR
by: The Investment Doctor
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The Investment Doctor
Long/short equity, value, debt, base metals
Summary

Trainline had a successful IPO this year, and main shareholder KKR sold out during the IPO and two subsequent secondary offerings and more than doubled its investment in five years.

I expect Trainline to have a tough time to break into the Continental Europe train market as operators already have established online sales channels.

Trainline could be a useful challenger and a good tool to compare train fares, but this does not warrant a multiple of 26x EBITDA, even if aggressive growth is expected.

I like the concept but I'm not sure this is a good entry point. Seeing the main shareholders sell indicates they deem the stock to be (more than?) fairly valued.

Introduction

Trainline (OTCPK:TNLIF) has been around for a while, but has been private for 22 years since its inception. This changed earlier this year when main shareholder KKR (KKR) decided to