A possible London Stock Exchange listing could be in the works for roadside recovery giant RAC with a reported a valuation of £5bn.
The potential float, first reported by the Financial Times, would be the largest since Wise and Deliveroo went public in 2021 and would likely result in the Walsall-headquartered company entering the FTSE 100.
London has been suffering from a lack of billion-pound-plus floats since the pandemic. However Princes Group and Shawbrook were valued at £1.3bn and £1.9bn respectively when they floated in October.
RAC is owned by CVC Capital Partners, Silver Lake Partners, and Singapore-based fund GIC, with sources adding that the consortium could also be open to a sale.
The RAC, with 15 million members, reported an 8% increase in revenues in the first half to £411m while earnings in the period rose by 12% to £152m.
Meanwhile, news of RAC’s potential listing coincides with reports that competing business AA has been seeking out buyers for a similar valuation of £5bn. AA is reportedly working with advisers JPMorgan and Rothschild to this effect.
According to FT, sources at AA confirmed that potential buyers, including private equity firms, have expressed an interest in the company at a £5bn valuation. An LSE listing could also be an option for AA, according to the sources. AA owners Stonepeak, TowerBrook, and Warburg Pincus declined to comment on the reports.
The offer for both companies is thought to be made more attractive by opportunities arising from the growing use of electric vehicles (EVs), which demand greater roadside assistance because of more frequent tyre damage or battery faults. EVs require additional maintenance partly because they tend to be heavier than standard cars.
In 2020, AA was taken private for £219m due to a large amount of debt, after being listed for six years. The company claims to have since turned over a new leaf, with revenue rising by 5% in the first half to £623m and adjusted EBITDA rising by 8% to £243m. With 17 million members, it is currently the largest roadside repair company in the country.