Next stop the stock market for Stagecoach: Brother and sister take the high road to the City with pounds 100M flotation of bus company with railway ambitions
Stagecoach, which operates 3,300 buses worldwide and is pioneering a private rail service in Britain, hopes to raise pounds 20.6m of new capital after expenses in an offer for sale and placing.
Brian Souter, who worked full-time as a clippie in Glasgow to pay his way through Strathclyde University, set up the business in 1980 with Ann Gloag, who gave up her job as a theatre sister. With their bus driver father's redundancy cheque, they spent pounds 25,000 buying two coaches on hire purchase and launched a service from Dundee to London.
In the flotation they plan to reduce their shareholdings from 90 to just over 50 per cent, using the fresh capital to mop up more local bus operators as they are privatised over the next two years.
Mr Souter said there were huge buying opportunities among the 32 remaining municipal bus operators and the 10 operating companies within London Buses, all of which the Government wants to privatise.
In the pathfinder prospectus, issued yesterday, the directors forecast that profits before tax in the year to 30 April would be at least pounds 12.8m, up from pounds 8.2m last time. Dealings in the shares are expected to commence on 20 April. The company is expected to be valued at pounds 100m- pounds 110m.
Stagecoach, which runs bus services in Scotland, the North-west, Midlands and South-east, also operates in Malawi, Kenya and New Zealand. It also ships old Routemaster buses to China in return for revenues from advertising on the side of them.
Stagecoach, which has expanded aggressively by buying small local operators, mostly former National Bus Company subsidiaries, has repeatedly come under informal investigation by the Office of Fair Trading following complaints by rivals. In 1991 it sold part of its Portsmouth operation after the Monopolies and Mergers Commission found that its expansion there could operate against the public interest.
Mr Souter, who qualified as a chartered accountant with Arthur Andersen, said: 'I learnt more on the buses than at Arthur Andersen. You really see the bottom end of the job and understand the problems.'
The company set up Stagecoach Rail in May 1992 to offer seats on sleeper trains from London to Scotland. It roughly breaks even.
Another company, Fenchurch Insurance Group, the Lloyd's broker, yesterday confirmed plans to come to the stock market. Roger Earl, managing director, said: 'We will almost certainly float the company within the next 12 to 15 months.' Rupert Hambro, the merchant banker, is the new chairman.
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