Trainline buys Captain Train for up to $189 million


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We hear a lot about how companies like Uber are transforming car-based transportation, but today comes news of another play in the sector, this time covering rail services. Trainline, a U.K.-based ticket service for railway and long-distance bus journeys, has acquired Captain Train, a Paris-based competitor that sells tickets for rail journeys on the continent, in what sources close to the deal tell us is a deal worth over €100 million, potentially between €160 and €170 million ($178 million to $189 million), half in cash and half in shares.

The deal points to wider consolidation in the market, creating a single company that will let users buy tickets across 22 countries and covering some 36 train operators — and potentially help that industry compete better against other forms of short and longhaul European travel, such as low-cost airlines. Acquisition talks started a year ago in March 2015.

Clare Gilmartin, Trainline’s CEO, would not confirm the price range that our sources provided us with, but she told us that the funds used in the deal come from a “multi hundred million pound” investment made in Trainline by KKR, which acquired Trainline in January 2015, reportedly in a deal valued at up to $671 million (as with today’s deal, the financial terms were not disclosed).

While the terms of the deal and the amount of shares have been set in stone for a while, the valuation of Trainline as well as the EUR/GBP exchange rate have fluctuated over the past few months. The company had raised around $10.7 million (€9.6 million) from Index Ventures, Alven Capital, CM-CIC Capital Privé and TheFamily, as well as business angels, such as Xavier Niel and Liligo founder Pierre Bonelli.

While most of the train companies that work with Trainline and Captain Train are also, in a sense, direct competitors with online booking forms of their own, Captain Train (originally called Capitaine Train) made a name for itself by building a smart platform that makes the process of buying those tickets significantly faster and easier — faster in fact than Trainline’s own service currently.

There are two key reasons why Trainline wants to acquire Captain Train. First, Trainline is overwhelmingly dominant in the U.K. but doesn’t operate anywhere else in Europe (Trainline has been trying to break into Europe, unsuccessfully). Captain Train sells tickets in France, Germany, Italy and many other European countries. Acquiring the French startup is much faster than signing deals with each train company in other European countries.

Second, Trainline doesn’t have its own itinerary calculation system. The company pays millions every year to use SilverRail. In the future, you can expect Trainline to switch to an in-house system powered by Captain Train’s technology. It would save the company millions every year.

“Today, the focus is on growing as much as possible in Europe,” Captain Train co-founder and CEO told TechCrunch. “We have the partnerships in Europe, we have the technical expertise with our own itinerary system that they don’t have. They have the vast majority of the U.K. market and marketing power.” Guyot will remain CEO of the subsidiary and take on the additional role of Director of Trainline International Limited.

Captain Train currently has some 1.4 million registered users and sells 5,000 tickets daily. In 2015, Captain Train processed $80 million in train ticket transactions (€72 million). Trainline, originally a spinoff from the Virgin Group, says it is the fifth largest e-commerce business in the U.K., with 4.7 million active customers and nearly 21 million web visits per month. It processes some $2.3 billion ticket transactions annually (£1.6 billion).

The two brands will co-exist for the time being. In the coming months, Trainline will add European itineraries and Captain Train will add British itineraries.

Trainline has also been trying to tap into the convenience and cost factors, building an app, Train, to help people better navigate the transportation system.

“We see significant growth in the rail market,” said Gilmartin, who noted that most sales today are still “largely offline, with close to 80% booked in station with people paying the highest price.”

When KKR acquired Trainline many saw it as a move that would take the UK company away from a potential public listing. Today, Trainline makes about a 5% commission on each ticket sale in the UK, Gilmartin said. Captain Train doesn’t disclose its margins. This could help position the company for displaying a bigger growth trajectory and potentially going public down the line.

“One year ago when KKR first invested in Trainline we had the vision of creating the clear global leader in digital rail mobility,” said Philipp Freise, Member and Head of Technology, Media and Telecoms in Europe at KKR in a statement. “The combination of Trainline and Captain Train is an important step on this journey, and will bring together a management team of world-class talent in rail, tech, product and marketing.”

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