Details for bidders could be rolled out in coming weeks
Aviva should be targeting up to £600m for the sale of RAC group, sources said today.
Insurance Times understands that Aviva has appointed advisers JP Morgan over a potential sale of the business.
There are at least two interested parties, and there is expectation that Aviva will roll out details for prospective bidders in the coming weeks.
Sources said a decision to sell RAC would be greeted well by the market.
Chief executive Andrew Moss has signalled this year that Aviva would be making disposals.
A source said: “They could get around £500m, give or take a £100m.
“That would be a step in the right direction. I think it would be taken well as somebody who is executing their strategy and doing it quickly.”
However, another source said that although Aviva bought RAC for £1.1bn in 2005 when valuations were high, there would be disappointment if it was sold for half the original purchase price.
Insurance Times understands Aviva is comfortable with selling RAC below £1.1bn because it has sold a string of businesses from RAC including LEX vehicle leasing, the British School of Motoring and Authowindscreens.
RAC is chiefly comprised of the motorway breakdown service and insurance arm.
Companies House shows that RAC plc, the holding company, which has inter-company loans and pension deficits, made a £6m after-tax profit in 2009 and a loss of £101m the year before. The subsidiary, RAC Motoring Services made a £51m after-tax profit in 2009 and £52m the year before.
Aviva declined to comment.
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