Financial News

  • 2 October 2012, 11:40

AA Owners Draft In Banks To Discuss Future

The owners of the AA breakdown recovery service and Saga financial products have appointed investment banks to advise on their long-term options for realising their multi-billion pound investment in the company.

I understand that Lazard and UBS were hired by Acromas Holdings in recent weeks to advise its board on a potential sale, break-up or stock market listing that would catapult it into the ranks of Britain's largest public companies.

The appointments were made alongside the recruitment of Ernst & Young, the accountancy firm, which has been drafted in to compile data about Acromas's finances for the company's shareholders.

People close to Acromas stressed that none of the appointments signalled any imminent activity and that a flotation or sale of either of the company's divisions was unlikely until 2014 at the earliest.

The first tranche of Acromas's debt does not mature until 2015, meaning that its investors have plenty of time to evaluate options for the business.

Acromas is principally owned by three private equity firms: Charterhouse, which holds 35 per cent of the company, and CVC Capital Partners and Permira, which own 19.9 per cent each.

Formed in 2007, the acquisitions of the AA and Saga cost a combined 6.3bn, although the group is now estimated to be valued at between 8bn and 10bn.

Paradoxically, the company's size may make an exit for the private equity groups more difficult: an outright sale of both the AA and Saga looks unlikely, and many City institutions remain sceptical about the attractions of investing in private equity-owned companies when they float on the stock exchange.

According to the company's latest annual report, almost 421m was repaid to its shareholders during 2011, a year which saw an improved financial performance at the AA and Saga.

Acromas declined to comment.