New AA FD will hope governance potholes are filled

A NEW FD at the AA will be hoping that the recently-listed motoring group’s corporate governance concerns have been put to bed when their tenure starts.

The brand may well be respected by the public, but some investors are concerned about the departures of both its CFO Andy Boland and CEO Chris Jansen – who had only been in the job for eight months – just weeks after the AA went through an IPO. Executive chairman Bob Mackenzie immediately took over the day-to-day running of the business, while an exact date for Boland’s departure, has yet to be announced.

Other issues the AA is trying to broach include a lack of an investor relations website and the appointment of a company secretary.

An AA spokesman told Financial Director that the company “had every intention of complying with the corporate governance code”, and that the lack of an investor relations website at the time of the announcement was simply down to the accelerated nature of the condensed transaction.

He said the website was already written and would be up and live next week, while an announcement about the appointment of a company secretary – who he added had already started working – would also be announced that same week.

Top gear

The condition of the insurer and roadside rescue group’s business looks to be in relatively rude health.

While its shares debuted at 250p – valuing the firm at £1.4bn and then dropped pretty rapidly to around the 231p, the new CFO will be pleased to see that investor faith in the brand has remained strong with the price rocketing as high as 306p and currently hovering around the 297p mark.

Such robust performance would seem to back the early faith displayed by its institutional ‘cornerstone’ investors – Aviva, Blackrock, CRMC, GLG Partners, Henderson Global, Henderson Volantis, Invesco, Legal & General and Lansdowne Partners.

At the time of the offering, the AA’s former owners private equity firms CVC and Permira Charterhouse both agreed to divest themselves of their entire stakes in the business.

The AA began life in 1905 at the cusp of the nascent motor industry, primarily to alert members of police speed traps. Since then it has morphed into a vast company offering everything from insurance and financial services to its traditional breakdown services.

Having voted to demutualise in 1999, it was snapped up by Centrica for £1.1bn.
Within five years, private equity firms CVC and Permira had bought the company from Centrica for £1.75bn.

The AA’s long-standing rival, roadside breakdown recovery firm RAC, is in talks with a number of other private equity groups about a £2bn sale, or more likely a flotation.