Selection of bidders through to second round
Aviva could keep up to £300m of pension liabilities on its books after selling its roadside rescue business RAC to private equity.
The insurance giant has put through a selection of bidders to the second round of the RAC sales process, which is expected to net around £900m, according to the Telegraph.
Aviva is understood to be reluctant to sell at any price, but the company will only manage to break even if it persuades buyers to pay closer to £1bn.
Buy-out firms Clayton Dubilier & Rice, Carlyle, BC Partners and operational specialists Bain Capital are understood to be amongst the firms to have gone through to the second round.
Aviva bought RAC in 2005 for just over £1.1bn, plus debt and the pension liability. Over the last six years the insurer has sold a string of businesses that came with the group, including BSM, the driving school, and Auto Windscreens, as well as Lex, the vehicle leasing company. Together these assets earned Aviva between £500m-£600m.
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.
