The flotation is the latest ownership move in the rail industry which is going through a round of consolidation as companies bulk up to compete with China's state-owned CRRC.

The planed merger between the rail operations of Germany's Siemens and France's Alstom recently fell foul of European regulators, triggering speculation Alstom and Canada's Bombardier could merge.

Stadler on Tuesday said its initial public offering (IPO) was the next stage in its growth strategy which is targeting annual sales of roughly 4 billion Swiss francs ($4 billion) by 2020.

"The planned IPO on SIX Swiss Exchange is a logical next step in Stadler's growth trajectory," Spuhler said in a statement, noting the group had grown strongly since he acquired it in 1989 with just 18 employees.

The IPO is expected to consist entirely of shares held by Spuhler. After the transaction he will keep at least a 40 percent stake as Stadler's largest shareholder and will continue to act as executive chairman, the company said. It has not yet put a price on the shares to be sold.

NEW ORDERS

RAG-Stiftung, which finances the cleanup of mining areas in Germany's Ruhr and Saar regions, and Stadler staff will keep their 10 percent stakes after the IPO, it added.

Stadler also reported a rise in new orders to 4.39 billion francs during 2018. Annual revenue fell 18 percent to 2 billion francs, while operating profit fell 20 percent to 151 million.

The company, which employs around 8,500 workers, has built more than 8,000 trains since it was founded in 1942. Customers include CalTrain in the United States, Wales & Borders in Britain, and Russia's rail company Aeroexpress that bought trains ahead of the 2018 soccer World Cup to ferry visitors from airports to Moscow.

Stadler wants to increase revenue in coming years by accelerating its service business and developing new products particularly in signaling technology.

The IPO is the latest in Switzerland, which had a bumper year for flotations in 2018 including with companies such as packaging company SIG Combibloc and CEVA Logistics.

Medical device maker Medacta Group also plans an initial share offering as it seeks to boost its visibility by going public.

Credit Suisse and UBS are acting as joint global coordinators and joint bookrunners for the Stadler IPO. BNP Paribas, Citigroup and Zuercher Kantonalbank are acting as joint bookrunners and UniCredit Bank as co-lead manager, while Reichmuth & Co, St. Galler Kantonalbank and Thurgauer Kantonalbank are acting as selling agents.

(Reporting by John Revill; Editing by John Miller and David Holmes)

By John Revill