It’s a case of second time, sort of lucky for private equity firm Acromas, whose charge, The AA, made its debut (conditional debut, anyway - trading proper starts on Thursday) on the stock exchange this morning.
The deal’s structure is complex, to say the least: AA was basically using the stock market as a platform to stage a buy-in by a pre-agreed group of investors, including CVC, Permira and Charterhouse. Because of the weird way it’s working, Acromas took the unusual step of floating 100% of the company.
The good news, for Acromas, is that the AA’s float was oversubscribed enough for it to be able to exit the company entirely. The bad news, for its new owners, is that having debuted at 250p (which, maths fans, values the company at just under £1.4bn), shares promptly fell more than 2%. Ouch.
Nevertheless, AA chief exec Chris Jansen maintained a resolutely positive outlook.
‘We are delighted we have seen such a strong demand…. It is no doubt driven by a combination of the core strengths of the business and the expectation of what we can do with the business in the future,’ he beamed. Perhaps his excitement has something to do with a rather generous incentive package, which has already been approved by the AA’s new owner: up to £50m in bonuses divided up by the senior management.
The Acromas contingent must feel a certain amount of relief: in May it floated its other major brand, Saga, to a lukewarm reception, with shares priced at the very bottom of their range. Since then, prices have only gone one way:
Source: Yahoo Finance
Watching Saga is a bit like looking at a car crash: you can’t tear your eyes away. As The AA will only be too aware…