AA Group raises £1.4 billion in stock market listing

Monday 23 June 2014 17.10
AA shares starts conditional trading today in London today
AA shares starts conditional trading today in London today

UK motoring firm AA Group said today it had completed an initial public offering (IPO) to raise gross proceeds of £1.4 billion. 

The offering, priced at 250 pence per share, was oversubscribed. Its owners, private equity firms Permira, Charterhouse and CVC have agreed to sell their entire 100% stake in the company, AA said in a statement.

AA shares will start conditional trading today. 

The private equity owners had already struck a deal to sell their stakes to a management buy-in team, led by Bob Mackenzie, a former boss of car insurer Green Flag who is to become AA's executive chairman, backed by institutional investors. 

Best known for its roadside recovery services, AA received commitments of over £930m from those investors, which include Aviva , BlackRock and Legal & General. They will take on AA's roughly £3 billion of debt. 

The AA is the UK's biggest motoring organisation and roadside recovery service, with around 16 million members. It also offers motor and home insurance and operates a driving school. 

The firm, which says it rescues a broken-down vehicle every nine seconds, had earnings before interest, tax, depreciation and amortisation (EBITDA) of £422.8m in the year to the end of January. 

Its pre-tax profit was £214.6m, down from £312.7m a year earlier because of an increase in finance costs.