Aviva sells off RAC to Carlyle for £1bn cash
AVIVA is to sell its RAC roadside rescue business to private equity firm The Carlyle Group for £1bn, as the British group continues scaling back from non-core areas to focus on its insurance operations.
The auction process was fiercely fought, with Carlyle battling rivals Clayton Dubilier & Rice and BC Partners to be the first private equity firm to get its hands on the business.
Aviva said yesterday 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.
The final price tag of £1bn valued RAC at around 17 times 2010 earnings.
It was underpinned by strong appetite from debt markets to provide financing for a deal, with leverage multiples of up to seven times Ebitda, harking back to deals done at the peak of the buyouts boom five years ago
To finance the buyout, JP Morgan, BNP Paribas, Credit Suisse, Morgan Stanley and UBS have underwritten a £520m pound loan and a £100m facility, it is understood.
Carlyle sees the possibility of growing the RAC’s roadside rescue business, Britain’s number two behind the AA with more than 7m members, and running it more efficiently, a source said.