Private equity backers of the UK’s AA are exploring exit options that could value the roadside assistance and insurance group at £4.5bn or more, following a strong operational turnaround under their ownership, according to Sky News.

TowerBrook Capital Partners, Warburg Pincus, and Stonepeak are reportedly in advanced talks to appoint JP Morgan and Rothschild as advisers for a strategic review. This process could pave the way for a trade sale, IPO, or partial stake sale in 2026 or later. While no immediate transaction is expected, the appointment of advisers signals the first step towards a potential exit.

The renewed confidence in the AA comes after four consecutive years of revenue and earnings growth. The group services over 16 million customers and handled 3.5 million breakdowns in 2024. Its diversified platform includes a large insurance division and the UK’s largest driving school network.

TowerBrook and Warburg Pincus acquired the AA in 2021 and have since led a successful transformation strategy, including significant deleveraging. However, the business still carries £1.9bn in net debt. Stonepeak invested £450m in 2023 via common and preferred equity at a £4bn valuation.

The AA has a long private equity history, having been previously owned by CVC Capital Partners and Permira before its IPO in 2014. It was later taken private at a fraction of its market value. The latest developments follow a multi-sponsor trend seen in the sector, as demonstrated by Silver Lake’s 2021 co-investment in rival RAC alongside CVC and Singapore’s GIC.

Sources familiar with the process suggest a minimum valuation of £4.5bn for the AA, reflecting improved performance and investor appetite for resilient, infrastructure-backed businesses.

Source: Sky News

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