AA shares dip after £1.4 billion initial public offering

AA , the roadside- assistance provider and auto insurer, fell in its first day of trading after a £1.4 billion initial public offering that resulted in the exit of its private-equity owners.

AA, which was owned by Charterhouse Capital Partners, CVC Capital Partners and Permira Advisers , sold £554 million shares at 250 pence apiece, according to a statement today.

The stock fell as much as 7.6 per cent and was trading at 240.5 pence earlier in London. Investors are becoming more selective as London has its busiest IPO year since 2007.

Saga , a provider of insurance and holidays to over-50s that had the same private-equity owners as AA, priced its May IPO at the bottom of a range and the shares are down 8 per cent since.

TSB Banking Group was priced below its book value for its IPO last week.

AA’s IPO was announced after the Basingstoke, England-based company’s owners agreed to sell shares to a group that includes its managers and Bob Mackenzie, former chairman of National Car Parks.

GLG Partners, Invesco and Henderson were also part of the investor group.

AA raised £185 million from the sale of new shares in the IPO and will use the proceeds to reduce net debt. Other investors who bought shares include Aviva , BlackRock, CRMC, Lansdowne Partners and Legal and General Group , according to a June 6th statement.

Acromas Holdings , the buyout firms’ investment vehicle, received about £1.2 billion in the IPO after selling all its shares.

Bloomberg