F1 investor acquires major stake in the RAC in £1bn+ deal
THE largest shareholder in Formula 1 has taken control of a major part of Walsall-based breakdown service, the RAC.
Funds managed by CVC Capital Partners, in collaboration with GIC, Singapore’s sovereign wealth fund, have purchased The Carlyle Group’s share of the roadside assistance firm, based in a centre adjacent to the M6 motorway.
The terms of the deal have not been disclosed but it is thought the acquisition is valued at around £1.5bn.
Should this be realised then it reflects a significant yield for Carlyle, which originally acquired its share of the breakdown service from Aviva in June 2011 in a deal thought to have been worth £1bn.
CVC has entered into a partnership with GIC and will become a co-shareholder in the RAC. The investment was made from CVC’s Strategic Opportunities Platform, established in response to growing demand from large investors to be able to invest for the long term in stable, high quality businesses. This is the platform’s first investment.
The RAC is the second-largest roadside assistance provider in the UK, with approximately 8.6 million members.
CVC said the deal complemented its portfolio as it had a deep understanding of investing in businesses in the motoring services industry. It said it saw the potential opportunities for significant long-term growth, building on the RAC’s existing strengths.
CVC, along with co-shareholder GIC, said it intended to continue investing in the RAC’s technology, data and telematics platform to augment the range and convenience of services to its members and corporate clients.
During Carlyle’s ownership, revenues at the RAC grew from £417m in 2010 to £498m in 2014 while at the same time improving member satisfaction and retention.
Chris Woodhouse, CEO of the RAC, said: “We are really looking forward to working with CVC and our existing partner GIC as we enter the next phase of our development. With their significant experience and long-term capital, we are confident that they are the perfect partners to further our success as one of the UK’s major roadside assistance providers.”
Marc Boughton, managing partner and co-head of the Strategic Opportunities Platform at CVC Capital Partners, added: “The RAC is a very high quality, resilient business in a stable industry, with great customer service and a loyal membership base.
“We look forward to working with GIC, a highly respected long-term investor and longstanding partner of CVC, 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.”
The transaction is subject to customary regulatory approvals and is expected to close in early 2016.
Legal advice was provided to GIC by Freshfields Bruckhaus Deringer, to Carlyle by Linklaters and to CVC by Clifford Chance.
