US investor Stonepeak takes £450m stake in the AA

Former owners Warburg Pincus and TowerBrook, both investment firms, will remain the majority shareholders in the AA.

They bought the company back in 2021 for £219m, but also took on a multi-billion pile of the AA’s debts. Since then the new owners say they have completed the first of several phases of a fresh strategy, which has seen it return to growth and accelerate its profitability.

AA chief executive Jakob Pfaudler said the company’s momentum is “strong” and the investment will allow it to “deleverage” – another word for reducing debt. We are delighted to welcome Stonepeak as a new shareholder in the AA, as they bring a wealth of skills and expertise in transportation and critical infrastructure,” he said.

“We have strong momentum, having recently reported positive revenue, profit, and customer growth, and we are excited about the future prospects of the business.

“This investment allows us to further deleverage whilst continuing to invest in our customers and people as we build a more digitised service offer to create long-term value for all our stakeholders.”

Stonepeak senior managing director Nikolaus Woloszczuk said: “We view the AA as a critical provider of transport services, underpinned by its unique network of nationwide patrols, and we are delighted to be investing to support this essential piece of the UK’s transportation system.

“With its market leading position, scale, iconic brand, and the resilient nature of its underlying market, we believe that the AA has the right fundamentals in place to accelerate growth, and we look forward to working with the AA, Warburg Pincus, and TowerBrook, as the company continues its development.”

In October, the AA said it was on track for its third consecutive year of underlying earnings growth after motor insurance price increases helped it weather tougher trading in its breakdown business.

The group reported underlying earnings up 2 per cent at £206m in the six months to July 31, with revenues up 10 per cent across the group.

The company – which also runs driving school businesses under the AA and BSM brands – increased consumer roadside membership by 1 per cent to 3.3m, while business customers jumped 12 per cent to 10.7m.

It saw a 4 per cent rise in motor insurance policies to just over one million in the half year.

In a statement issued in October, the AA said it was seeing “positive momentum despite the ongoing challenging economic and competitive environment” and will continue to focus on cost savings and pricing.

“As we approach the second half of our financial year, we remain focused on driving our transformation and developing further propositions for customers, with ensuring the health of our business by delivering further efficiency savings and assessing our pricing strategy to manage cost inflation in a sustainable manner,” it said. Mr Pfaudler said the AA was now a higher-quality and more predictable business, with an increasingly strong track record of profitable growth.