AA backers sell £450m stake to US investor Stonepeak | Business News


A US-based investment firm is to inject hundreds of millions of pounds into the AA, the breakdown recovery service, nearly three years after it delisted from the London Stock Exchange.

Sky News has learnt that Stonepeak, which specialises in infrastructure and related deals, is close to agreeing the details of a £450m into the company which for many years branded itself as ‘Britain’s fourth emergency service’.

City sources said this weekend that Stonepeak’s investment, which is expected to involve it taking a stake of about 15% in the AA, could be announced as soon as next week.

A statement is expected to be made to the Irish Stock Exchange, where the AA has publicly traded bonds, the sources said.

The deal, which will imply an enterprise value for the company of approximately £4bn, will underscore the turnaround in its fortunes under chief executive Jakob Pfaudler, who took the helm in 2021.

The AA has an experienced leadership team, including Rick Haythornthwaite, the chairman-designate of NatWest Group, as its chairman.

People close to the company say that under their stewardship, more than £1bn of value has been created, with the company now cash-generative and customer numbers once again growing.

The AA remains indebted, with net debt of £2.2bn at its last year-end.

Insiders said the new investment from Stonepeak would be used to strengthen the AA’s balance sheet by repaying some existing debt, as well as to invest in growth initiatives.

With 14m members, the AA and the RAC dominate Britain’s roadside recovery market.

Founded in 1905 by a quartet of driving enthusiasts, the AA has had a hectic recent corporate history.

It passed 100,000 members in 1934, before reaching the 1m mark in 1950.

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At various points over the last 20 years, it has been owned by Centrica, shared a parent company with Saga, the over-50s travel and insurance specialist, and been a standalone listed company in London.

In 2021, it was taken private again after a bid from a private equity consortium comprising Towerbrook Capital Partners and Warburg Pincus.

That takeover came after years of challenges grappling with its enormous debt pile, with the deal valuing its equity at less than £250m.

The AA has 2700 patrols attending an average of 9,400 breakdowns every day.

It operates the largest driving school business in the UK under the AA and BSM brands.

By bringing in a third major shareholder, it mirrors a deal struck in 2021 by the RAC, its closest UK rival.

The RAC’s then owners – CVC Capital Partners and the Singaporean state fund GIC – brought the technology-focused private equity firm, Silver Lake, in as another major investor.

The company has explored a sale of its insurance arm, which also has millions of customers, at various points but is not actively doing so now.

Goldman Sachs is advising the AA on the investment from Stonepeak.

A spokeswoman for the AA declined to comment on Saturday.