RAC float skids off the road as GIC buys stake

PLANS for a £2bn float of RAC skidded off the road yesterday after Singapore's sovereign wealth fund GIC agreed to buy a major stake in the firm from private equity owner Carlyle Group.

The sudden turnaround will see GIC become joint majority shareholder of RAC together with Carlyle, and also means city heavyweight and CBI president Sir Mike Rake will not take up his position as chairman.

The roadside recovery firm had announced at the start of September it would appoint Rake as chairman to spearhead its IPO plans.

However, with the float no longer happening after GIC’s investment, Rob Templeman will continue as chairman.

Carlyle, which bought RAC for £1bn in 2011, had been well advanced in considering IPO plans, with a retail offering seen as likely to have been included.

However Carlyle instead made a deal with GIC, with which it had close links, with the Singapore fund keen on the strong cash flow from RAC’s 8.2m members,

Henry Ormond, senior vice-president of GIC Special Investments, said: “RAC is a good example of GIC’s investment objectives as a long-term investor. RAC combines both consistently strong financial performance, driven by the outstanding quality of service it offers its members, and continued growth potential.”

GIC also has stakes in Heathrow Air­port and the Broadgate office and retail complex in London.

BEHIND THE DEAL
FRESHFIELDS | DAVID HIGGINS
1 David became a Freshfields partner in 2001, and is now the co­-head of Freshfields global financial investors sector group.

2 David is Freshfields relationship partner for GIC, with David previously advising GIC and Blackstone on the acquisition of a majority interest in Rothesay Life from Goldman Sachs.

3 David has also advised a range of clients such as the Canada Pension Plan Investment Board on its acquisition of a stake in Dorna and ista, and 3i Group plc on its disposal of Enterprise.

Also advising…
David Higgins and Richard Thexton led Freshfields legal advice to GIC, while Richard Brown, Olof Clausson and James Innes of Latham and Watkins provided legal advice to Carlyle and RAC. GIC was also advised by Nomura, while Carlyle and RAC were also advised by Barclays and Linklaters.