RAC scraps its £2bn listing
RAC has torn up plans for a £2bn float after its private equity owner agreed an 11th-hour investment from Singapore’s sovereign wealth fund GIC instead.
Carlyle – the breakdown service’s majority investor – said it would sell half of its stake to GIC in a deal that sources familiar with the situation said was worth around £1bn.
Management, i ncluding chief executive Chris Woodhouse, will also sell some of their shares, although they are expected to retain significant holdings of around 10pc between them.
Carlyle will take an undisclosed dividend out of the business after loading it with more debt as part of a restructuring of its finances.
GIC is understood to have made its interest known within the past three weeks, as RAC was gearing up for a stock market float set to value the business at £2bn.
The UK’s second-largest breakdown service had already unveiled a series of boardroom hires designed to spruce up its board for listing on the stock market.
It secured a major coup by convincing City veteran Sir Michael Rake to add the chairmanship to his positions as president of the CBI, deputy chairman of Barclays and chairman of BT Group.
But Rake, along with f ellow boardroom appointees David Lowden, Peter Plumb and Cilla Snowball, will no longer join the RAC.
They are expected to receive a pay-off despite never having done any work for RAC, although the company and Carlyle declined to comment on the matter.
Current chairman Rob Templeman, who was due to step down and become a non-executive director, will stay in the same job.
GIC will be allowed to nominate three directors to the board to represent its interests.
RAC was expected to go ahead with its float this month, as part of a flurry of listings that were put on hold as the UK awaited the outcome of the Scottish referendum on independence.
It was thought to be holding fire to gauge the market reaction to results from its major rival the AA, which said earlier this week that l i sting and f i nance costs had dragged down profits.
But discussions with GIC about a deal have gathered pace since the beginning of September, culminating in yesterday’s announcement.
RAC boss Chris Woodhouse said that the investment was, ‘ very good news for RAC’s employees, members and customers as they [GIC] back the continuing investment and long-term growth plan for the business’.
GIC has some £62bn of assets under management, with UK inter- ests including stakes in Heathrow Airport and the City of London’s Broadgate development.
Its investments are funded by the vast wealth of disciplinarian citystate Singapore, which administers naked canings for criminal offences and where homosexuality is illegal.
Henry Ormond, senior vice-president of GIC Special Investments, said: ‘RAC combines both consistently strong financial performance, driven by the outstanding quality of service it offers its members, and continued growth potential.
‘We are delighted to have the opportunity to partner with the management team and The Carlyle Group, and to support RAC’s future success.’
Carlyle bought RAC from insurer Aviva for £1bn in 2011.
The deal with GIC means that it has enjoyed a threefold return on its investment to date, well-placed sources said. Carlyle and the RAC were advised by bankers from Lazard & Co, Barclays and Goldman Sachs, with Linklaters providing legal advice. GIC used Japanese bank Nomura and received legal guidance from Freshfields.