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AA drives forward flotation with £1.4bn listing

Game returned to the stock market yesterday two years after it collapsed into administration. Picture: Scott Louden

Game returned to the stock market yesterday two years after it collapsed into administration. Picture: Scott Louden

  • by MARTIN FLANAGAN
 

FLOTATION fever returned to the London market yesterday as the AA outlined plans for a listing in the second half of June that will value the motor breakdown giant at some £1.4 billion.

The business, owned by Acromas Holdings, the private equity-backed group behind the recent sale of shares in over-50s holidays company Saga, will pass to a group of blue-chip “cornerstone” institutional investors. They include Aviva, Blackrock, Henderson Global, Invesco and Legal & General Investment Management.

It came as video gaming retailer Game returned to the stock market yesterday just two years after it collapsed into administration – the latest float valuing the business at £340 million with the shares priced at 200p.

The flotation rebound came after turbulence surrounding public listings in recent weeks led some to question whether the new issues market had peaked.

Saga’s shares have performed poorly since their market debut, as have those in greetings card retailer Card Factory, while fashion group Fat Face pulled its listing plans a day before Saga’s debut.

The AA, founded in 1905, said the new main institutional investors it and its advisors have lined up had committed to buy £930m of the 554 million new and existing shares being issued at 250p per share.

The float is structured as a management buy-in, with Bob Mackenzie, the former boss of car insurer Green Flag, set to become the AA’s new executive chairman.

Acromas, which is owned by private equity firms Charterhouse and Permira, said it had originally planned to retain a 31 per cent holding in the AA following the flotation.

“However, given the interest shown to date, Acromas has agreed to make its remaining stake available to new investors at the same valuation,” the company said. There is no retail component to the offer. Trading in shares in AA, Britain’s biggest roadside recovery firm, with four million members and a 40 per cent market share, is expected to start later this month.

The share sale follows an approach to Acromas by a management buy-in team led by Mackenzie, who has extensive experience in the sector, including his chairmanship of Northgate, the vehicle fleet management business.

He was also chairman and chief executive of National Car Parks, which owned Green Flag, and will work at the AA alongside current chief executive, Chris Jansen, and Andy Boland, the existing chief financial officer.

Andrew Goodsell, chairman of Acromas, said the AA continued to develop the business through the downturn, including the new “home services” operation. He said the business was “poised for great things as an independent public company”.

Mackenzie said there were “significant opportunities to grow the business, a sentiment shared by the high quality cornerstone investors”.

Game, now known as Game Digital, has seen a 35 per cent stake in the company sold, allowing existing shareholders to raise £101m and the business proceeds of £20m. Hedge fund Elliott Advisors, which owned more than 90 per cent of Game after a rescue deal led by private equity firm OpCapita, is retaining a significant stake.

 

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