UK-based Serco Group has agreed to sell its Great Southern Rail (GSR) business to Australian private equity firm Allegro Funds for an enterprise value and cash consideration of £2.5m.

Serco announced the sale of GSR in November 2014 as part of the company’s disposal programme of businesses that were identified as not being core to its future strategy.

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Serco’s strategy review identified that GSR was not aligned with the company’s future strategy due to its historical lack of profitability, as well as limited synergies with the rest of Serco’s transport portfolio.

"Great Southern Rail is an iconic and award-winning Australian tourism business operated by some great people."

Serco Group CEO Rupert Soames said: "Great Southern Rail is an iconic and award-winning Australian tourism business operated by some great people.

"However, Serco needs to concentrate on its core as a leading supplier of public services and we cannot provide the focus and investment GSR needs to thrive."

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GSR provides tourist rail services in Australia through the Ghan, the Indian Pacific and the Overland.

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Soames added: "We will continue to build a strong transport business where Serco’s capabilities can be deployed and transferred internationally, and our recent contract award to support the new North South Railway in Saudi Arabia is testament to the progress we are making."

The sale of GSR, which is expected to be completed in the coming months, is subject to customary closing conditions and approvals.

Last year, Serco Group reported revenue of £58m and a pre-exceptional operating loss of £3m. The company is forecasting a £90m trading profit for this year.