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AA stock market debut looks in need of repair

Published: 16:00 23 Jun 2014 BST

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AA's (LON:AA.) stock market debut looked as if needed a little repairing itself as shares in the breakdown firm disappointed.

The stock, at the time of writing is at 232p - from a float price of 250p. That's a drop of over 7% despite being oversubscribed.

In total, 554mln shares were floated giving a market cap of £1.285bn, down from £1.4bn at the float price.

It means the company has suffered the same fate as former sister company Saga, whose recent float was lacklustre, despite the build-up, and closed flat on the first day of conditional deals.

Saga is an insurer and cruise ship operator, which targets the over-50s market.

Both Saga and AA used to be part of Acromas, a company owned by private equityfirms CVC Capital, Charterhouse Capital and Permira.

The private equity groups, which bought the AA from utility group Centrica for £1.75bn in 2004, sold their entire holdings in the AA.

The great and the good of the City participated in the share offering, with the cornerstone investors being Aviva, Blackrock, CRMC, GLG Partners, Henderson Global, Henderson Volantis, Invesco, L&G and Lansdowne Partners.

Its been a mixed picture however for recent listings. Few could accuse the TSB list on Friday as being a failure.

The price was confirmed at 260p per share - the middle of the range set at 250p-270p - giving the firm a market value of £1.3billion

Shares raced to a 30p premium and they are still at 290p today.

The AA is a former mutual society, created in 1905 by motoring enthusiasts. It demutualised in 1999 and was snapped up by Centrica the same year for £1.1bn.

The flotation of the AA was done at the hurry-up, possibly to get to the market ahead of the RAC, another motoring organisation that is thought likely to come to the market this year; the RAC is owned by US private equity firm Carlyle.

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