- Stonepeak invests 15% stake
- AA receives £450 million
- Improved performance, reduced debt
An agreement between Stonepeak, Towerbrook, and Warburg Pincus will grant Stonepeak a 15% stake in the roadside recovery service.
Hundreds of millions of pounds will be injected into the AA, the breakdown recovery service, by an American investment firm. This comes almost three years after the organization was delisted from the London Stock Exchange.
Stonepeak, an investor in infrastructure and associated transactions, is nearing a consensus on the terms of a £450 million investment in the company that has operated under the moniker “Britain’s fourth emergency service” for many years.
City sources reported this weekend that Stonepeak’s investment, anticipated to consist of a 15% stake in the AA. The following week might see an early disclosure.
Sources indicate that an announcement regarding the Irish Stock Exchange, where the AA’s publicly traded bonds are listed, is forthcoming.
The transaction, which will result in an enterprise value of around £4 billion for the company, will highlight the significant improvement in its performance since 2021, when CEO Jakob Pfaudler assumed leadership.
Rick Haythornthwaite, NatWest Group chairman-designate, leads the AA’s experienced executive team.
According to sources with knowledge of the organization, they are responsible for the creation of over £1 billion in value, the company is currently cash-generative, and consumer growth has resumed.
The AA reported a net debt of £2.2 billion at the conclusion of its most recent fiscal year.
AA’s Strategic Revitalization Journey
According to sources with knowledge of the situation, the AA would use the Stonepeak investment to strengthen its balance sheet through the repayment of existing debt, in addition to funding development initiatives.
The AA and RAC hold a significant market share of 14 million members in roadside recovery in Britain.
Four driving devotees established the AA in 1905, and it has experienced a turbulent corporate past in recent years.
It surpassed one hundred thousand members in 1934 and surpassed one million by 1950.
It has, at different times during the past two decades, been under the ownership of Centrica, a subsidiary of Saga, a travel and insurance specialist for those over the age of fifty, and a separately listed corporation in London.
In 2021, Towerbrook Capital Partners and Warburg Pincus proposed taking the firm private again.
This acquisition occurred subsequent to an extended period of difficulties involving the management of its substantial debt burden, and the transaction assessed its equity at a valuation below £250 million.
The AA dispatches 2700 patrols daily to respond to an average of 9,400 malfunctions.
It administers the largest driving school enterprise in the United Kingdom under the brand names AA and BSM.
Its agreement to acquire a third significant shareholder mirrors one reached in 2021 with its closest UK competitor, the RAC.
CVC Capital Partners and the Singaporean state fund GIC, the RAC’s former owners, recruited Silver Lake, a technology-focused private equity firm, as an additional significant investor.
The organization has previously considered divesting its insurance division, which also serves millions of clients. However, it is not presently engaged in such discussions.
Goldman Sachs is advising the AA regarding the investment made by Stonepeak.
How Olivia Newton-last John’s dress from Grease became a global phenomenon.
