RAC vehicle breakdown company put up for sale by Aviva

Insurance giant Aviva has put its RAC vehicle breakdown unit on the block as part of a plan to divest non-essential businesses. The sale could fetch between £500 million and £600 million.

Aviva purchased the RAC group for £1.1 billion in 2005, and has since disposed of several inherited businesses including Auto Windscreens, vehicle-leasing company Lex and BSM, the driving school.

At the time of purchase, Aviva announced its aims to sell other insurance packages to its breakdown insurance customers.

It is understood that JPMorgan Cazenove, one of Aviva’s brokers, has been mandated to handle the sale process for the business. A sale could be completed within just months, though Aviva may shelf the sale if offers do not match expectations.

Private equity outfits are thought to be the parties most likely to be interested in purchasing the breakdown business. Possible trade buyers include the AA, which has private equity owners.

Part of the plan, outlined by Aviva’s chief executive, Andrew Moss, is to focus on operations in 12 countries, to include Britain, and to implement strict performance guidelines for each one. These include hitting a target of at least £100 million in operating profits, and paving the way to create a ‘brand’ value of £1 billion.

Mr Moss indicated that he would decide to exit underperforming countries if need be.

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