AA explores 5bn sale as RAC weighs London stock market listing

"The AA has appointed advisers to explore a potential sale or stock market flotation, five years after the debt-laden roadside assistance group was taken private, as rival RAC also considers a return to public markets. The AA, which is owned by private equity firms Warburg Pincus, TowerBrook Capital Partners and Stonepeak, has hired JP Morgan and Rothschild to review strategic options for the business, which is valued at around £5 billion. The process is understood to be at an early stage."

"Founded in 1905 as the Automobile Association, the AA was owned by its members until it was demutualised in 1999. Its time as a listed company proved turbulent, largely due to heavy debts accumulated under previous private equity owners CVC and Permira, which acquired the business in 2004. The AA floated in 2014 at 250p a share, with the price peaking at 416p the following year, before collapsing. In 2021 it was taken private by TowerBrook and Warburg Pincus at just 35p a share."

"Today, the AA serves around 17 million customers. It reported revenues of £621 million for the six months to the end of July, up 6 per cent year on year, and pre-tax profits of £60 million, compared with £39 million a year earlier. Crucially for potential investors, the company has reduced its leverage significantly. Net debt has fallen to 4.1 times earnings, down from 7.6 times just before it was taken private, putting it"

The AA has engaged JP Morgan and Rothschild to review options including a sale or stock market flotation, with the business valued at about £5 billion and the process at an early stage. The company is owned by Warburg Pincus, TowerBrook and Stonepeak, while rival RAC backers are also assessing a possible London listing. The AA was founded in 1905, demutualised in 1999, and endured heavy debts and a turbulent listed period under previous private equity owners. The group serves around 17 million customers, reported rising revenues and profits, and has cut net debt from 7.6x to 4.1x earnings.

Read at Business Matters