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AA motoring group floatation valued at £1.385bn

British motoring group the Automobile Association (the AA), best known for its roadside recovery services, has floated its shares on the London Stock Exchange and a management buy-in backed by institutional investors had been completed, it was reported on Monday.

The AA was formed by motoring enthusiasts in 1905. Along with its breakdown recovery service, the company also sells insurance and financial products. The organisation voted to demutualise in 1999 and was acquired by Centrica for £1.1bn.

Permira, Charterhouse and CVC acquired the AA from Centrica for a reported £1.75bn in 2004. The private equity firms are now selling their entire stakes, with the shares valued at approximately £1.385bn.

According to broadcasting company the BBC, the offering was priced at £2.50 per share and was oversubscribed. AA shares have commenced conditional trading, which allows City firms to buy and sell shares to stabilise the price before launching on public markets.

A management buy-in led by Bob MacKenzie, the former boss of former Green Flag, was backed by institutional investors such as Aviva, Blackrock, Legal & General, Invesco and Lansdowne Partners. These investors will reportedly take on AA’s approximately £3bn pounds of debt and are said to have committed at least £930m.

MacKenzie, who has been appointed as the executive chairman of the AA, was cited as saying: “We will work with the existing management and the AA’s loyal workforce to deliver an enhanced experience for all our members and customers, and to serve the broader needs of the UK motorist.”

He added: “Our offer will enable the AA to become an independent publicly-listed company and we look forward to creating substantial value for all our stakeholders.”

AA Executive Director Martin Clarke was quoted as saying: “The focus is on deleveraging the business. The company will use 185 million pounds of the IPO proceeds, raised by the sale of new shares, to help pay down debt.”


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