U.K. Insurer AA Down Following $2.4 Billion IPO

By Ruth David | June 23, 2014

AA Ltd., the U.K. roadside- assistance provider and auto insurer, fell in its first day of trading after a 1.4 billion pound ($2.4 billion) initial public offering that resulted in the exit of its private-equity owners.

AA, which was owned by Charterhouse Capital Partners LLP, CVC Capital Partners Ltd. and Permira Advisers LLP, sold 554 million shares at 250 pence apiece, according to a statement today. The stock fell as much as 7.6 percent and was trading at 240.5 pence at 9:33 a.m. in London.

Investors are becoming more selective as London has its busiest IPO year since 2007. Saga Plc, a provider of insurance and holidays to over-50s that had the same private-equity owners as AA, priced its May IPO at the bottom of a range and the shares are down 8 percent since. TSB Banking Group Plc was priced below its book value for its IPO last week.

AA’s IPO was announced after the Basingstoke, England-based company’s owners agreed to sell shares to a group that includes its managers and Bob Mackenzie, former chairman of National Car Parks. GLG Partners, Invesco Corp. and Henderson Group Plc were also part of the investor group. AA raised 185 million pounds from the sale of new shares in the IPO and will use the proceeds to reduce net debt.

Other investors who bought shares include Aviva Plc, BlackRock Inc., CRMC, Lansdowne Partners LP and Legal & General Group Plc., according to a June 6 statement. Acromas Holdings Ltd., the buyout firms’ investment vehicle, received about 1.2 billion pounds in the IPO after selling all its shares.

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