AA motoring group shares slide on stock market flotation
Shares in the AA motoring group suffered a disappointing debut on the London Stock Exchange.
The stock dropped around 5% in its first day of conditional trading to 235p, after being priced at 250p per share by the firm.
Shares opened at 244p and dropped as low as 231p at one point, even though it had been over-subscribed.
Its owners, private equity firms Permira, Charterhouse and CVC, sold their entire stakes in the AA.
The motoring association initially said the company would be valued at about £1.385bn, but its market capitalisation dropped to £1.313bn on Monday.
Institutional investors, including Aviva, Blackrock, Legal & General, Invesco, and Lansdowne Partners, backed a management buy-in led by former Green Flag boss Bob MacKenzie, who has been appointed as the AA's executive chairman.
"We will work with the existing management and the AA's loyal workforce to deliver an enhanced experience for all our members and customers, and to serve the broader needs of the UK motorist," Mr MacKenzie said in a statement.
"Our offer will enable the AA to become an independent publicly-listed company and we look forward to creating substantial value for all our stakeholders."
The firm's stock market flotation echoed that of sister company Saga, which closed flat on its debut.
The AA was formed by motoring enthusiasts in 1905 primarily to avoid police speed traps. It is best known for its breakdown recovery service, but also sells insurance and financial products.
The organisation voted to demutualise in 1999 and to be acquired by Centrica for £1.1bn.
Private equity forms CVC and Permira bought the company from Centrica for £1.75bn in October 2004.