F1 Shareholder CVC Motors To £2bn‎ RAC Deal

The biggest shareholder in Formula One motor racing will announce on Wednesday the purchase of a big stake in the RAC (Taiwan OTC: 2237.TWO - news) , one of Britain's leading breakdown recovery businesses.

Sky News understands that CVC (Taiwan OTC: 4744.TWO - news) ‎Capital Partners (LSE: 0LSM.L - news) has finalised a deal to acquire close to 50% of the RAC from Carlyle, a rival private equity group which bought the company in 2011.

Sources said the two firms had agreed a transaction based on an enterprise value of about €2.2bn (£1.4bn).

The agreement will be the first deal struck by CVC's new Strategic Opportunities Platform, a vehicle focused on longer-term investments under the umbrella of one of the world's most successful buyout firms.

CVC will join the Government Investment Corporation of Singapore (GIC) on the RAC's share register, with the roadside recovery firm's management also holding a stake.

The RAC has 8.6 million members, and has grown its revenue from £417m in 2010 to nearly £500m last year, according to insiders.

It (Other OTC: ITGL - news) had also been examining a stock market flotation prior to the GIC investment last year and more recently, but is said to have been deterred from pursuing that route by the lacklustre performance of its larger rival, the AA (Other OTC: AATDF - news) .

Aviva (Other OTC: AIVAF - news) , the insurer, sold the RAC in 2011 to focus on its core insurance operations but was widely regarded to have undervalued the company by offloading it for £1bn.

Neither Carlyle nor CVC could be reached for comment on Tuesday.