New hands at the RAC wheel

ROADSIDE recovery firm RAC has got a new owner after private equity group CVC Capital Partners bought out US rival Carlyle Group.

The deal values RAC at around £2.2bn, but the investment is not a typical private equity buyout.

CVC has made the purchase through its Strategic Opportunities Platform fund, which is for investors who want less risky deals and are happy to keep their money in longer than the typical three to five years of a private equity fund.

CVC’s fund has a 15-year life and will hold investments for more than eight years. In return investors get a less risky 12-14pc annual return rather than the 20pc that many private equity funds aim for.

CVC will own just under 50pc alongside Singapore’s sovereign wealth fund GIC, which is retaining its stake in RAC. Management own between 5pc-10pc.

RAC is Britain’s second-largest roadside assistance provider after the AA, and has around 8.6m members.

Marc Boughton, managing partner at CVC, said: ‘We look forward to working with GIC to support the continued development of this great brand.

‘We and GIC recognise that this will take time and capital, and this is why the RAC is an ideal initial investment for this platform.’

Carlyle bought RAC for £1bn in 2011. It had initially planned to float the company but decided against it when GIC invested last autumn.