AA and RAC owners map exit route - report

(Sharecast News) - The owners of AA and RAC are exploring options for exiting the UK's biggest roadside recovery businesses, it was reported on Monday, including a potential £5bn stock marketing listing. According to the Financial Times, the AA's owners are considering selling the business in a potential £5bn deal.

The consortium, which includes TowerBrook Capital Partners and Warburg Pincus, has appointed Rothschild and JPMorgan to advise it on options for the business.

Citing unnamed sources close to the situation, the FT noted that the business - which has been valued at £5bn - has already had expressions of interest from both private equity and strategic buyers. However, a London stock market listing has also not been ruled out.

Rival RAC, meanwhile, is understood to be considering a potential listing, also with a £5bn valuation. The RAC is owned by CVC Capital Partners, Singapore's sovereign wealth fund GIC and Silver Lake Partners.

The owners of both businesses have so far decline to comment on the report.

It would, however, be highly unusual for two such similar companies to come to market at the same time.

The AA was taken private in 2020 for £219m following a difficult period as a public company, after its previous private equity owners ramped up debt levels. Debt has now been cut, and in the six months to June end the AA - which has 17m customers - posted adjusted earnings of £243m on revenues of £623m.

The RAC, which has 15m members, posted earnings of £152m on revenues of £411m in the same period. CVC and GIC acquired The Carlyle Group's stake in the business in 2015.