AA backers sell £450m to the American investor Stonepeak

A US-based investment firm is to inject hundreds of millions of pounds into the AA, the rescue service, nearly three years after it was delisted from the London Stock Exchange.

Sky News has learned that Stonepeak, which specializes in infrastructure and related deals, is close to agreeing the details of a £450m into the company which for many years has branded itself as ‘Britain’s fourth emergency service’.

City sources said at the weekend that Stonepeak’s investment, which is expected to involve it taking a stake of around 15% in AA, could be announced as soon as next week.

A statement is expected to be made to the Irish stock exchange, where AA has publicly traded bonds, the sources said.

The deal, which will give the company an enterprise value of around £4bn, will underline the turnaround in its fortunes under chief executive Jakob Pfaudler, who took the helm in 2021.

The AA has an experienced management team, including Rick Haythornthwaite, the chairman-designate of the NatWest Group, as chairman.

People close to the company say more than £1bn has been created under their leadership. value, where the company is now making money and the number of customers is growing again.

AA remains indebted with net debt of £2.2bn. at the end of last year.

Insiders said the new investment from Stonepeak would be used to strengthen AA’s balance sheet by repaying some existing debt, as well as to invest in growth initiatives.

With 14 million members, the AA and RAC dominate the UK’s roadside repair market.

Founded in 1905 by a quartet of driving enthusiasts, AA has had a hectic recent corporate history.

It passed 100,000 members in 1934 before reaching the 1m mark in 1950.

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At various times over the past 20 years it has been owned by Centrica, shared a parent company with Saga, the over-50s travel and insurance specialist, and been an independent London-listed company.

In 2021, it was taken private again following a bid from a private equity consortium consisting of Towerbrook Capital Partners and Warburg Pincus.

This takeover came after years of challenges struggling with its huge debt pile, with the deal valuing its equity at less than £250m.

The AA has 2,700 patrols who attend an average of 9,400 breakdowns each day.

It operates the largest driving school business in the UK under the AA and BSM brands.

In bringing in a third major shareholder, it mirrors a deal struck in 2021 by RAC, its closest UK rival.

RAC’s then-owners – CVC Capital Partners and Singaporean sovereign wealth fund GIC – brought in technology-focused private equity firm Silver Lake as another major investor.

The company has explored selling its insurance division, which also has millions of customers, at various times, but is not actively doing so now.

Goldman Sachs is advising AA on the investment from Stonepeak.

A spokeswoman for the AA declined to comment on Saturday.

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