AA to press on with £4bn flotation despite Saga woe

Jun 6, 2014

Sister company Saga’s disappointing listing is not expected to stop motoring group AA

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The AA is to press ahead with a £4bn stock market flotation despite a disappointing first month’s trading for sister company Saga, according to Sky News.

Sky says the business’s parent company, private equity-backed Acromas Holdings, could announce a listing as soon as today, through a process known as an accelerated initial public offering.

Ten large city institutions including Aviva Investors, Blackrock, JP Morgan Asset Management, Lansdowne Partners and Legal & General Investment Management will act as ‘cornerstone’ investors, each becoming major shareholders.

An unnamed source told the broadcaster that Bob MacKenzie, a former boss of car insurance provider Green Flag, has been lined up to act as the company’s new chairman, with Deutsche Bank brought in to advise the company.

The deal is expected to value the AA’s equity at around £1.3bn. It is thought some investors were put off by the organisation’s huge £3bn debts – and Acromas is expected to announce a plan to reduce this as part of its prospectus.

Saga has disappointed investors since it listed on the stock exchange last month after rising only 0.5p per share in its first day of trading, leading some commentators to point to ‘floatation fatigue’ in the City.

The AA’s longstanding rival, the RAC, is also being prepared for a flotation, with private equity owner Carlyle hurrying to get it ready for the stock market.

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