In a noteworthy development for the UK roadside recovery market, the private equity owners of the AA and RAC are making moves toward potential exits, expected to occur in 2024. Both companies aim for valuations around £5 billion, as reported by the Financial Times. The AA, which is backed by TowerBrook Capital Partners, Warburg Pincus, and Stonepeak, is currently considering a sale, with financial advisory firms Rothschild and JPMorgan advising on its strategic options. Meanwhile, the RAC, owned by CVC Capital Partners, GIC, and Silver Lake Partners, is also positioning itself for an exit, with an initial public offering (IPO) in London seen as the most likely outcome, although a sale remains a possibility.
Financially, both firms have demonstrated robust performance leading up to this potential transition. The AA, which was acquired for £219 million in 2020, has significantly strengthened its financial standing by reducing its debt to 4.1 times earnings before interest, taxes, depreciation, and amortization (EBITDA). In the first half of 2025, the AA reported revenues of £623 million, marking a 5% increase, while adjusted EBITDA rose by 8% to £243 million. The company serves approximately 17 million customers and has expanded its service offerings, including a recent partnership with OpenAI.
On the other hand, the RAC, with a membership base of 15 million, also saw an 8% increase in revenue, reaching £411 million, and a 12% rise in earnings to £152 million in the same period. Both companies are poised to capitalize on the growing trend of electric vehicle adoption, which necessitates more specialized roadside assistance services.
The simultaneous exits of two comparable businesses at similar valuations present a unique scenario that could test investor appetite in the market. City advisers have noted the rarity of such occurrences, raising questions about market dynamics. As both companies navigate their next steps, they will likely keep a close eye on regulatory considerations, particularly concerning antitrust approvals for any mergers or acquisitions that may arise.
In summary, the AA and RAC are at a pivotal moment, with their private equity owners exploring strategic exits that could reshape the landscape of the roadside recovery industry in the UK. As the timeline for these potential transactions unfolds, stakeholders will be closely monitoring developments, particularly regarding market reactions and the broader implications for the sector.