AA races ahead with plans for £1.4bn flotation

 
Peter Spence
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BRITAIN’S largest car insurer and roadside recovery firm, the AA, yesterday confirmed its intention to list on the London Stock Exchange in the second half of this month.

The company’s current private equity owners want to sell off the stock to a buy-in team, backed by institutional investors, who will then take it public.

They’ll be aiming to sell around £210m of shares at a valuation of approximately £1.39bn.

The firm will list in a process often referred to as an accelerated initial public offering (IPO). Investors form syndicates to bid for an entire company, and then execute an immediate IPO.

Cornerstone investors, who have been brought together by broker Cenkos, include Aviva, Blackrock, CRMC, GLG Partners, Henderson Global, Henderson Volantis, Invesco, L&G and Lansdowne Partners.

Despite the large syndicate, the company confirmed yesterday that it expects the free float of the company to be over 25 per cent after admission.

AA has said that it will offer up to 554m new and existing shares at 250p per share. The float follows the IPO of AA’s sister company, Saga. If the float is successful, the AA is likely to be large enough to gain admission to the FTSE 250.

Since floating at the end of May, Saga’s share price has dropped by more than five per cent, with bankers arguing behind the scenes over where the responsibility lies for what is looking like a botched flotation.

Despite that, the AA’s executive chairman, Bob Mackenzie, is confident that the firm has a strong investment case.

He said yesterday that the company “is a fundamentally strong business” and that “with such valuable support from our cornerstone investors, my colleagues and I are looking forward to continuing the AA’s growth as an independent public company”.

Greenhill & Co and Deutsche Bank are acting as financial advisers on the deal.