The owners of the RAC roadside recovery service are preparing to offload the company in a deal which could value it at up to £5bn.
Sky News has learnt that CVC Capital Partners, the Singaporean sovereign investment fund GIC and Silver Lake Partners have been in discussions about plans to launch an auction or a stock market listing of the company.
The RAC, which was founded in 1897, is one of the world’s oldest roadside assistance companies.
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It now has about 14 million members, making it nearly as large in customer terms as the AA, its biggest rival.
A precise valuation of the business was unclear on Thursday, although insiders said a range of between £4bn and £5bn was reasonable.
The AA is also backed by private equity investors who have begun exploring an exit.
Sky News revealed earlier this year that Towerbrook Capital Partners, Warburg Pincus and Stonepeak have appointed JP Morgan and Rothschild to conduct a review of the AA’s strategic options.
The RAC’s shareholders are at an earlier stage of deliberations, with investment banks yet to be appointed.
People close to the situation said any decision about a transaction would not be made until next year, although it is possible that advisers will be hired in the next few months.
The RAC has almost as many members as its main rival. File pic: iStock
The RAC was sold by Aviva, the insurer, to buyout firm Carlyle for £1bn in 2011 in order to focus on its core insurance operations.
Carlyle then brought in GIC as a co-investor three years later in a move which derailed plans for a stock market flotation.
CVC – a former joint owner of the AA – bought out Carlyle in 2015 through a deal involving its longer-term Strategic Opportunities Fund.
Silver Lake, the technology-focused private equity firm, came on board in 2021.
The RAC employs thousands of people and is one of Britain’s most recognisable consumer brands.
It is chaired by the former Debenhams chief Rob Templeman and run by chief executive Dave Hobday.
The company’s profitability has surged from roughly £170m at the point at which CVC invested to more than £300m.
Bankers believe the RAC’s owners will be keen to take it public if market conditions allow, but are open to a private sale of the business.
The AA has also seen a major improvement in its performance, with it having recorded four consecutive years of customer, revenue and earnings growth.
It has also been through a succession of owners during the last 25 years.
In 1999, the AA was bought by Centrica, the owner of British Gas, for £1.1bn.
It was then sold five years later to CVC and Permira, two buyout firms, for £1.75bn, and sat under the corporate umbrella Acromas alongside Saga for a decade.
The AA listed on the London Stock Exchange in 2014, but its shares endured a miserable run, being taken private nearly seven years later at little more than 15% of its value on flotation.
None of the parties contacted by Sky News would comment.