Virgin Trains USA, formerly known as Brightline, has decided to shelve previously announced plans to take the company public.
“As we explored a public offering, a number of alternative financing sources became available that allow us to keep the company private and meet our growth strategies,” the company said in a statement. The company declined a request for an interview, citing its required regulatory quiet period for any securities filings.
The company operates express service between the downtowns of Miami, Fort Lauderdale and West Palm Beach. It has planned expansions from West Palm Beach to Orlando and from Orlando to Tampa.
While the company says it has seen steady ridership gains since its Miami service began in May, the number of riders fell short of projections. In a 2017 bond prospectus, the company forecast ridership of more than 1 million for 2018, based on launching Miami service early in 2018. Instead, the company reported fewer than 600,000 riders for the year.
The company recently announced losses of $87.1 million for the first nine months of the year, with $5.2 million in revenues.
Abigail Eberts, an analyst for money management and research group Renaissance Capital who had analyzed the proposed IPO, said she was not surprised by the announcement.
“We were concerned about the demand for that type of transportation in Florida — it’s unclear,” she said. She noted that the company charged discounted “introductory” fares for most of 2018.
In addition, she said, the cost of the expansion projects the company has proposed were “astronomical” and “daunting.”
Earlier Tuesday, Bloomberg reported that the planned IPO, which sought to raise more than half a billion dollars at a more than $3 billion valuation, was going to be the largest of 2019.
Coincidentally, California Governor Gavin Newsom announced Tuesday that plans for high-speed rail between Los Angeles and San Francisco were also being abandoned.
A spokesperson for Fortress Investment Group LLC, the majority owner of Virgin Trains USA, declined to comment. A spokesperson for London-based Virgin did not immediately respond to comment.