Motoring group AA has confirmed plans to sell its Irish business to a Carlyle Group fund and financial services buyout team for €156.6 million.
AA, which provides roadside recovery and insurance broking services, said the sale of AA Ireland to Carlyle Cardinal Ireland Fund (CCI) and Carlyle Global Financial Services Partners II is expected to close in late July.
The motoring group confirmed it was in talks with the US equity group about a possible acquisition last month, having put the Irish business up for sale earlier this year.
The AA’s Irish unit, which has been in operation for over 100 years, is led by former Bank of Ireland executive Brendan Nevin. The Irish unit, which employs about 480 people, provides motor breakdown cover for over 300,000 customers and auto, home and travel insurance for more than 225,000.
AA Ireland generated a pretax profit of €12 million and had gross assets of €163 million as of January 31st, the company said.
The business in Ireland will continue to be run by the current executive team, who have also invested in the firm.
“We are excited that the AA Ireland will now be an Irish headquartered company run by its local management team. Our new owners have a proven track record of success across the sectors we operate in, which will benefit the AA Ireland as we look to continue growing the company,” said Mr Nevin.
The deal is CCI’s seventh investment in Irish companies since it was established by Carlyle and its Dublin-based partner Cardinal Capital in 2014 with €125 million in backing from the then National Pension Reserve Fund (NPRF).
Among the group’s other Irish investments are stakes in chocolate manufacturer Lily O’Brien’s and payment processing provider Payzone.
Peter Garvey, managing director of the Carlyle Group, told The Irish Times the fund would continue to explore further potential investments in Ireland.
However, he added that given the current uncertainly due to Brexit the fund would take its time before committing to further investments.
The acquisition of AA Ireland is subject to approval from the Competition and Consumer Protection Commission and the Central Bank of Ireland.
Carlyle previously owned AA rival RAC, having acquired it from Aviva for £1 billion in 2011 before selling its stake on to a buyout team consisting of CVC and GIC for about £2 billion in December.
Mr Garvey said the group’s former ownership of RAC meant it had a keen understanding of the motoring services and insurance sectors.
“We successfully grew revenues by 83 per cent across a four-year period. We will look to bring that relevant experience to bear at AA Ireland,” he said.
AA, which listed in 2014, said it intended to use the proceeds to repay part of its debt.
