Aviva sells RAC to Carlyle for £1bn
Aviva is to sell its RAC roadside rescue business to private equity firm The Carlyle Group for £1bn, as the insurer continues scaling back from non-core areas to focus on its insurance operations.
Aviva said it expected an accounting profit of £600m from the sale of Britain’s second-largest breakdown recovery group, and would use the proceeds to strengthen its balance sheet and invest in its main markets.
“It is a reasonable transaction for shareholders. It unlocks value and it was never really clear where RAC fitted within the Aviva business,” said Brown Shipley fund manager John Smith, who holds Aviva shares within his portfolios.
Aviva, which operates in about 30 countries, has been trying to boost profit by concentrating on 12 markets where it makes most money. As part of its plan, the company has walked away from less profitable businesses in Italy and the United States.
The company also cut its stake in Dutch unit Delta Lloyd in April, netting £381m.
Aviva said on Thursday it was confident of meeting its near-term financial targets.
Its shares have risen by around 10 percent over the past six months and by nearly 30 percent over the past year. By contrast, shares in British rival Prudential Plc have risen 3 percent and 25 percent over the same two periods, respectively.