Carlyle Group Aims to Sell RAC Equity

(July 24, 2011) — The Carlyle Group is planning on selling up to £200 million ($326 million) of equity in RAC — the roadside rescue business it bought from Aviva — in an effort to reduce its funds’ exposure to one single asset, according to the Sunday Telegraph.

The newspaper reported that the US private equity firm initiated talks with a range of investors that included Singapore’s sovereign wealth fund, known as the Government of Singapore Investment Corp. The auction process for RAC was fought with Carlyle battling rivals Clayton Dubilier & Rice and BC Partners, which increased the price beyond initial expectations.

While Carlyle was able to force Aviva to keep RAC’s pension fund in its own books, it was forced to increase its equity payment to £525 million ($856 million). The buyout group also supplemented this with £520 million of debt, the newspaper reported, as well as an overdraft and capital expenditure facility of £100 million.

Meanwhile, data provider Dealogic revealed that the total value of UK buyouts in the three months to the end of June fell to its lowest quarterly level since the beginning of 2010. During the period, a total of 42 deals were announced, worth a total of $3.8 billion — a 66% drop from the second quarter of last year, when more than $11 billion of deals were struck. The $1 billion-plus deals included Carlyle’s June acquisition of RAC from Aviva as well as Charterhouse Capital Partners’ acquisition of a 65% stake in Environmental Resources Management from Bridgepoint Capital.