Frankfurt Probably the best-known German start-up company in the mobility industry is heading for the stock exchange. According to information from financial and corporate circles, Flix, the parent company of Flixbus and Flixtrain, wants to mandate a so-called IPO consultant in the coming weeks. This is a first step towards an IPO. The consultant’s task is to select the banks that accompany an IPO.
According to the information as a result, no decision has yet been made as to whether Flix really dares to go onto the floor. If that’s the case, stock sales are unlikely to happen this year. “Nothing is to be expected here before Easter 2024,” says financial circles. It is also unclear whether a possible share placement will take place in Germany or in the USA.
A spokeswoman for Flix said on request that Flix is constantly examining various financing options. “This also includes a potential IPO.” Flix is well financed and has strong investors. There is no time pressure. “Discussions with banks and advisors are a normal part of our business.”
Recently, indications had accumulated that an IPO was approaching. A few days ago, the company celebrated its tenth anniversary and mentioned financial data for the first time. After that, the company made it out of the red and achieved a positive operating result before interest, taxes, depreciation and amortization (Ebitda) last year. Flix has not yet given a specific number. Sales increased by 185 percent to a good 1.5 billion euros.
CFO Christoph Debus had described the past year as the most successful for Flix so far. In the current year, sales should increase by at least 20 percent, and profitability should continue to improve. “With this, Flix is knitting an equity story for an IPO,” says the company’s environment.
Flix has experienced rapid growth
Flix started the bus business with the liberalization of the long-distance bus market in Germany in 2013. Just two years later, the young company started an aggressive growth course. Flix took over rivals such as Mein-Fernbus, the European business of the US company Megabus and Postbus.
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At the same time, the company expanded with its buses into numerous European countries. In 2019, Flix acquired the Turkish bus company Kamil Koc, and in 2021 finally the US long-distance bus icon Greyhound. In 2017, Flix sent the first trains on their way, initially in Germany. The green wagons are now also rolling on Swedish rails.
The company sees itself as a technology provider. Flix does not want to have its own buses or trains on its balance sheet. They are usually provided and operated by partners. Flix takes over route and network planning, sales, customer service and pricing via the technology platform.
Such an “asset-light strategy” is well received on the stock exchange, after all, there are no high material assets and investments in the figures. At the same time, this is what made the rapid growth possible. “Our goal is mobility that is affordable for everyone,” says co-founder and CEO André Schwämmlein, describing his strategy.
The green buses now drive in many countries. Chile is now to be conquered as a new market.
(Photo: imago/Ralph Peters)
The investors have supported and co-financed this so far. Venture capitalists include General Atlantic, Permira, TCV, HV Capital, Blackrock, Baillie Gifford and Canyon Partners. According to the latest information, the three founders Schwämmlein, Jochen Engert and Daniel Krauss still hold just over 25 percent of the shares. The most recent round of financing of over 650 million dollars took place in the summer of 2021.
But after ten years – a typical holding period for venture capitalists – it is not unusual for the previous lenders to demand a return on their investments. Especially since Flix’s business model has expanded. The company now also includes its own buses in the balance sheet – albeit in a manageable size.
With the purchase in Turkey, around 1000 vehicles came to Flix. With the Greyhound takeover, the company’s own fleet grew by a further 1000 buses. This causes irritation among previous investors. The financial industry reports that they are not a big fan of buying hardware on a large scale.
The train business is complicated
At the same time, Schwämmlein wants to expand the business, and Flix needs money for that too. Chile is set to become the 41st country with green buses. The company is also set to grow on the rails. “Bus and train complement each other, we believe in the train as part of our growth strategy,” said Schwämmlein at the anniversary celebrations a few days ago.
However, rail in particular is proving to be significantly more complex than bus operations. Flixtrain struggles with quality and, like its oversized rival Deutsche Bahn, suffers from the ailing network in Germany. Many trains are not punctual, which frustrates customers.
Nevertheless, Flix wants to expand the offer. According to earlier information from financial circles, the management is considering the purchase of trains, financed by external investors. The investment would thus take place outside the Flix balance sheet. The plans have not yet been officially confirmed, and it is unclear whether management will pursue them further.
One thing is certain: Schwämmlein and his team still see a lot of potential for the mobility company. “Travel and mobility has been a growth market for years and will continue to be so,” says the CEO. If Flix wants to benefit from this, direct access to the capital market certainly doesn’t hurt.
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