The private equity owners of the AA, Britain’s biggest roadside recovery business, are looking for a potential £5bn sale or stock market flotation, while the owners of the rival RAC are targeting a London listing with a similar valuation.
The AA, which provides roadside assistance as well as insurance and driving lessons, is owned by a consortium including TowerBrook Capital Partners, Warburg Pincus and Stonepeak, and has been sounding out buyers, in news first reported by the Financial Times.
The business is valued at £5bn and is thought to have sparked interest from private equity companies and strategic buyers. The owners are also considering floating the AA on the London stock market – a decade on from its flotation by previous private equity owners. The plans are still in the ea…
The private equity owners of the AA, Britain’s biggest roadside recovery business, are looking for a potential £5bn sale or stock market flotation, while the owners of the rival RAC are targeting a London listing with a similar valuation.
The AA, which provides roadside assistance as well as insurance and driving lessons, is owned by a consortium including TowerBrook Capital Partners, Warburg Pincus and Stonepeak, and has been sounding out buyers, in news first reported by the Financial Times.
The business is valued at £5bn and is thought to have sparked interest from private equity companies and strategic buyers. The owners are also considering floating the AA on the London stock market – a decade on from its flotation by previous private equity owners. The plans are still in the early stages.
Separately, the owners of the RAC are working on a stock market listing with a £5bn valuation. The business is owned by the Jersey-based private equity firm CVC Capital Partners, GIC – Singapore’s investment fund – and the US investment company Silver Lake Partners. A sale is also an option, although a stock market flotation is thought more likely.
The AA, which was founded in 1905 as the Automobile Association, was taken private by TowerBrook and Warburg Pincus in a £219m takeover agreed in 2020. The motoring group had endured a torrid time during its six years on the stock market.
The AA’s previous private equity owners floated the company on the stock market in 2014 at 250p a share, which valued the business at £1.4bn. CVC, Permira and Charterhouse made £1.2bn in the float. The shares hit a low of 15p in 2020 as concerns mounted over its ability to pay off its £2.6bn debts.
The AA says it has transformed itself and now has debts of £1.9bn, equivalent to 4.1 times earnings, compared with 6.7 times when it was a public company.
With 17 million customers, it posted revenues of £623m in the first half of the year, up 5%, and a profit before tax of £50m, up 54% and driven by a reduction in finance costs. Underlying earnings rose by 8% to £243m.
The RAC has 15 million members, up from 14.1 million last year. Its revenues rose by 8% to £411m in the first half, while underlying earnings rose by 12% to £152m. The 128-year-old business said in August that it was confident about its outlook for this year and beyond.
The AA, CVC and Stonepeak declined to comment. The RAC and other companies have also been contacted for comment.