RAC scotches imminent market float with debt refinancing

 
Michael Bow
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THE OWNER of UK breakdown service RAC has ruled out floating the company on the stock market after refinancing some of its debt instead.

Carlyle Group, the US buyout giant, is taking out a new £86m loan to help fund a so-called dividend recapitalisation, which allows buyout groups to extract money from a company they own without selling it.

RAC will take on the debt and use a further £81m on its balance sheet to make a pay out to Carlyle and its investors.

Deutsche Bank and BNP Paribas are arranging the loan.

It is the second time Carlyle has undertaken a dividend recap of RAC since acquiring it two years ago. The first recap saw it take out a £260m loan in October 2012.

The move puts a lid on speculation Carlyle could join its private equity peers and rush to exit the company via an initial public offering.

Senior figures at the group have been fending off approaches by investment bankers in recent weeks hoping to engineer a float of RAC, amid a boom in private equity-backed floats.

The pullback from an IPO follows a similar move by Carlyle’s peer Permira, which has ruled out rumours it was planning to float high street retailer New Look.

This year will see close to a dozen private equity owned companies float in London, as firms look to tap buoyant markets.

Carlyle declined to comment.