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The Carlyle Group to Acquire RAC from Aviva

Global alternative asset manager The Carlyle Group has reached an agreement to acquire RAC Limited (RAC), the motoring services provider, from Aviva plc (Aviva). The transaction represents an enterprise value of GBP1bn. Completion, which is subject to regulatory and competition approvals, is expected at the end of the third quarter of 2011.

Founded in 1897, RAC is one of the oldest roadside assistance companies in the world and the second largest UK roadside assistance provider with over 7 million members. The company is headquartered in Birmingham, has approximately 4,000 employees, and provides motor-related services to both consumers and corporate clients. RAC’s vehicle and breakdown services are offered through a nationwide, branded patrol force, focusing primarily on vehicle repair and recovery. The company also provides motor insurance broking services, legal and motor claims services.
With Carlyle’s strategic involvement and access to additional capital for future investment, the RAC is set for long-term profitable growth in an expanding area of the motor services market.  The RAC management team has a clearly articulated strategy, which is fully endorsed by Carlyle, to optimise the roadside recovery business, grow the insurance and financial services business, and diversify further into motor services and other personal finance-related products in the longer term.
Commenting on the transaction, Angela Seymour-Jackson, CEO of RAC says: “We are very excited to be partnering with Carlyle, since their financial strength and experience in the motor services industry will be very valuable to us. This investment will enable us to enhance our current customer offering as well as diversify into new business areas. Carlyle has recognised that RAC is a high-quality business with significant growth potential.  We have enjoyed an excellent partnership with Aviva, and are looking forward to our next phase of growth under new ownership.”
Andrew Burgess, Managing Director of The Carlyle Group, says: “We are delighted to be acquiring RAC, a renowned brand synonymous with trust and reliability. We see great opportunity to enhance the roadside business with an emphasis on ensuring customer satisfaction at both the consumer and corporate levels. There is also strong longer term potential to grow the business by investing in new and innovative financial services offerings such as motor and household insurance. We look forward to leveraging our industry network and deep sector expertise to enable RAC to reach its full potential.”
Equity for this transaction will come from Carlyle Europe Partners III (CEP III), a EUR5.4 billion buyout fund focused on investment opportunities in Europe. The fund has made seven investments in the past year – Sagemcom (global communications technology business), Integrated Dental Holdings (dental services provider), a portfolio of Primondo Specialty Group’s retail businesses, B&B Hotel Group (hotel chain), Giannoni (manufacturer of stainless steel heat exchangers), NBTY (manufacturer of vitamins and nutritional supplements and parent company of Holland and Barratt), Commscope (infrastructure solution provider for communications networks). CEP III also made its most recent exit in June 2011 when Carlyle sold 63% of its stake in Moncler, the luxury fashion company.
Carlyle’s experience in the automotive sector includes Hertz Corporation (the largest worldwide general use car rental brand), Applus (the leading global testing company for cars and the automotive industry) and Britax Childcare (leading manufacturer of premium branded children’s car safety seats). Carlyle’s investments in the insurance sector include China Pacific Insurance Group and Grupo Qualicorp. Carlyle’s recent investments in the UK include Talaris (cash management technology business), IDH (dental services provider) and The Mill (award winning visual effects company).

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