Talgo, Spain’s largest railway car manufacturer by sales, has hired banking advisers to prepare a stock market listing in Madrid that could value the company at up to €1bn ($1.4bn).
Talgo, which produces railway cars for Spain’s high speed AVE network, would join a raft of planned flotations on the Madrid bourse that includes the savings banks Bankia and Banca Civica and the expected privatisation of the lottery company Loterías y Apuestas del Estado.
The company’s backers – the largest being Trilantic Capital Partners, the former private equity arm of Lehman Brothers – have retained Nomura, Credit Suisse and Banco Santander to explore an initial public offering they hope will value the group at between €700m and €1bn, according to people briefed on the plans.
Any listing plans, however, would be delayed if there were to be a resumption of investor concern about Spain’s sovereign debt load and the stability of the country’s banking sector.
The investors, which include the members of the Oriol family that founded the company in 1942, expect railway travel to benefit from increasing energy costs, as well as urbanisation and the expansion of infrastructure in developing markets.
Talgo’s high speed train’s serve routes across western Europe, as well as in the US and Kazakhstan. Alongside the construction of high speed trains, so-called tilting coaches and locomotives, the company also specialises in providing train maintenance equipment.
Part of Talgo is still owned by an estimated 50 third- and fourth-generation members of the Oriol family.
Most family members, however, left the company’s board of directors when Trilantic made its original investment for an undisclosed amount in 2006.
Carlos de Palacio Oriol and Jose Maria Oriol Fabra remained chairman and chief executive respectively, but the private equity group recruited new board members such as Kraft board member John Pope.
Until the current rush of companies to list in Madrid, the exchange had seen relatively little activity over the past three years, with the online travel booking systems technology company Amadeus, previously owned by private equity investors, being one of the only new listings.
The European market for stock market listings has lagged behind the US and Asia in the past two years as investor sentiment towards the region was eroded by successive European Union bail-outs of Eurozone periphery countries.
Investors have also remained largely sceptical towards buying new shares in companies owned by private equity groups, including some of the most high profile cancelled listings, such as ISS, the Danish outsourcing group owned by Goldman Sachs and EQT of Sweden.
Get alerts on Patentes Talgo SL when a new story is published