The company, which has averaged three acquisitions a year for the past four years, is also interested in buying parts of British Rail.
Stagecoach applied for all 10 franchises and is confident of winning one, possibly two, before the privatisation process is completed in the autumn.
Operating in London is part of Stagecoach's strategy of moving into large metropolitan areas. The company, traditionally a provider of services in small population areas, bought Busways, the Newcastle operator, last month for pounds 27.5m. It has also purchased 20 per cent of Sheffield Mainline.
Derek Scott, finance director, said due diligence on the London franchises was at an advanced stage. The company was looking abroad, including Latin America, but he added: 'There is so much happening in the UK that our energies will be concentrated here for the next year.'
Stagecoach yesterday reported a 46 per cent increase in pre-tax profits to pounds 18.9m for the year to end-April, its first full year on the stock market.
Brian Souter, executive chairman, said: 'Our current trading is in line with expectations with the results to date of all businesses ahead of the equivalent period last year.' Operating profits, excluding acquisitions, rose 10.6 per cent to pounds 20.8m. Turnover rose to pounds 191m from pounds 154m.
Stagecoach said it had been able to cut costs by modernising its vehicle fleet and improving its purchasing power.
Last year, the company's businesses in Africa, New Zealand and Hong Kong produced pounds 36.39m of turnover and pounds 5.2m of group operating profits out of a total pounds 27.1m.
Group earnings rose 24 per cent last year to 10.3p a share, producing a final dividend of 2.6p, making 4.1p for the year.
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