AA to Be Valued at $2.3 Billion in Investor-Backed IPO

The private-equity owners of U.K. roadside-assistance provider AA Ltd. are selling the company to an investor group as part of an initial public offering that will value it at 1.4 billion pounds ($2.3 billion).

AA, owned by Charterhouse Capital Partners LLP, CVC Capital Partners Ltd. and Permira Advisers LLP, is being sold to a group that includes Bob Mackenzie, former chairman of National Car Parks, and AA management, according to a statement today. Their investors include GLG Partners, Invesco Corp. and Henderson Group Plc, the company said.

Investors have become more selective in what they buy as London has its busiest year in terms of IPOs since 2007. Saga Plc (SAGA), a provider of insurance and holidays to Britain’s over-50s that has the same private-equity owners as AA, priced its May IPO at the bottom of the range and shares have fallen 4 percent since.

AA’s sale comprises 554 million new shares and existing shares offered at 250 pence apiece, according to the statement. AA has received 930 million pounds of orders from institutional investors. The IPO is planned for the second half of the year.

Other investors include Aviva Plc, BlackRock Inc., CRMC, Lansdowne Partners LP and Legal & General Group Plc., according to the statement. Acromas Holdings Ltd., owned by the private-equity firms, will retain 31 percent of the company after the sale to the investor group and plans to sell that to other buyers at the same valuation.

Cenkos Securities Plc (CNKS) is working on the transaction. Shares of the company rose as much as 18.5 percent on news of the deal and were up 14 percent to 207.50 pence at 4:20 p.m. in London.

Both AA and Saga were bought by private-equity firms in 2004 and combined in 2007 in a transaction that valued them at 6.2 billion pounds. The earlier IPO of Saga marked a split with AA, which raised more than 3 billion pounds of debt in July.

CVC, Charterhouse and Permira didn’t sell any of their shares in Saga’s IPO because of the price levels at which the deal got done, people with knowledge of the matter said in May.

To contact the reporters on this story: Aaron Kirchfeld in London at akirchfeld@bloomberg.net; Ruth David in London at rdavid9@bloomberg.net

To contact the editors responsible for this story: Aaron Kirchfeld at akirchfeld@bloomberg.net Steve Bailey, Jon Menon

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