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National Post
a day ago
- Business
- National Post
Canada Prepaid Card and Digital Wallet Market Intelligence Report 2025-2029: Open-Loop Cards Prepaid Financial Expansion, Corporate Shift to Prepaid Solutions Accelerates Financial Innovations
Article content Article content DUBLIN — The 'Canada Prepaid Card and Digital Wallet Market Intelligence and Future Growth Dynamics Databook – Q2 2025 Update' report has been added to offering. Article content The prepaid card and digital wallet market in Canada is expected to grow by 6.7% on annual basis to reach US$ 26.26 billion in 2025. Article content The prepaid card and digital wallet market in the country has experienced robust growth during 2020-2024, achieving a CAGR of 11.1%. This upward trajectory is expected to continue, with the market forecast to grow at a CAGR of 5.6% during 2025-2029. By the end of 2029, the prepaid card and digital wallet market is projected to expand from its 2024 value of US$ 24.63 billion to approximately US$ 32.61 billion. Article content The Canadian prepaid card market is expanding rapidly, driven by the increasing adoption of open-loop prepaid cards, digital wallet integration, and corporate utilization. As consumer demand for flexible and secure payment options grows, financial institutions and fintech companies are enhancing their offerings to meet evolving preferences. Businesses are also leveraging prepaid solutions to streamline financial management and incentivize employees, further solidifying the role of prepaid cards in the corporate sector. Article content Looking ahead, competition in the market is expected to intensify as digital payment infrastructure continues to evolve. Integrating prepaid cards with mobile wallets will offer enhanced convenience, while regulatory and technological advancements will drive further innovation. Companies prioritizing strategic partnerships, digital advancements, and regulatory compliance will be best positioned to capitalize on the expanding opportunities within Canada's prepaid card industry. Article content Competitive Landscape of the Canada Prepaid Card Market Article content The Canadian prepaid card market is set for sustained expansion, driven by increasing consumer demand for digital payment solutions and corporate adoption. The presence of established financial institutions, fintech players, and new entrants introducing innovative prepaid solutions is fostering a highly competitive environment. Strategic partnerships and mergers also contribute to market consolidation, enhancing the availability and accessibility of prepaid card products across multiple sectors. Article content Regulatory changes and technological advancements will further shape the competitive landscape in the coming years, encouraging transparency and fostering innovation. The Bank of Canada's initiative to regulate payment service providers will strengthen security and increase provider competition. Businesses prioritizing digital integration, compliance with evolving regulations, and customer-centric prepaid solutions will be well-positioned to capitalize on emerging opportunities within Canada's growing prepaid card market. Article content Current Market Dynamics Article content Canada's prepaid card market is experiencing significant growth, driven by increasing consumer demand for flexible payment solutions and the rise of digital wallets. The market encompasses open-loop cards, which can be used anywhere the card network is accepted, and closed-loop cards, limited to specific merchants or services. Open-loop cards have seen swift adoption, with ownership steadily rising and contributing to increased transaction volumes. This expansion is further supported by Canada's high credit card penetration, which exceeded 82% last year, enhancing user purchasing power. Additionally, as employment levels rise, more Canadians gain access to the banking system, further amplifying the market reach of prepaid cards. Article content The Canadian prepaid card market features a mix of established financial institutions and emerging fintech companies. Prominent players include Berkeley Payment Solutions, Blackhawk Network, Carta Worldwide, and Desjardins, each offering various prepaid products tailored to various consumer and corporate needs. In recent years, new entrants have introduced innovative prepaid solutions to cater to evolving consumer preferences. For instance, fintech firms like Koho have launched reloadable prepaid cards linked to mobile apps, providing users with budgeting tools and real-time transaction notifications. Article content Canada Prepaid Payment Instrument Market Size and Forecast Article content Canada Digital Wallet Market Size and Forecast Article content Retail Shopping (Value, Volume, Avg. Value) Travel (Value, Volume, Avg. Value) Restaurant (Value, Volume, Avg. Value) Entertainment and Gaming (Value, Volume, Avg. Value) Recharge and Bill Payment (Value, Volume, Avg. Value) Article content Canada Digital Wallet Retail Spend Dynamics Article content Food and Grocery – Transaction Value Health and Beauty Products – Transaction Value Apparel and Foot Wear – Transaction Value Books, Music and Video – Transaction Value Consumer Electronics – Transaction Value Pharmacy and Wellness – Transaction Value Gas Stations – Transaction Value Restaurants & Bars – Transaction Value Toys, Kids, and Baby Products – Transaction Value Services – Transaction Value Others – Transaction Value Article content Canada Prepaid Card Industry Market Attractiveness Article content Load Value Trend Analysis Transaction Value Trend Analysis Transaction Volume Trend Analysis Average Value per Transaction Number of Cards Market Share Analysis by Functional Attributes – Open Loop vs. Closed Loop Market Share Analysis by Prepaid Card Categories Article content Canada Open Loop Prepaid Card Future Growth Dynamics Article content Transaction Value Trend Analysis Transaction Volume Trend Analysis Average Value per Transaction Number of Cards Article content Canada Closed Loop Prepaid Card Future Growth Dynamics Article content Transaction Value Trend Analysis Transaction Volume Trend Analysis Average Value per Transaction Number of Cards Article content Canada Prepaid Card Consumer Usage Trends Article content By Age Group By Income Group By Gender Article content Canada Prepaid Card Retail Spend Dynamics Article content Food and Grocery – Transaction Value Health and Beauty Products – Transaction Value Apparel and Foot Wear – Transaction Value Books, Music and Video – Transaction Value Consumer Electronics – Transaction Value Pharmacy and Wellness – Transaction Value Gas Stations – Transaction Value Restaurants & Bars – Transaction Value Toys, Kids, and Baby Products – Transaction Value Services – Transaction Value Others – Transaction Value Article content Canada General Purpose Prepaid Card Market Size and Forecast Article content Canada Gift Card Market Size and Forecast Article content Gift Card Market Size and Forecast by Functional Attribute Article content By Open Loop Gift Card By Closed Loop Gift Card Article content Gift Card Market Size and Forecast by Consumer Segments Article content By Retail Consumer Segment By Corporate Consumer Segment Article content Teen and Campus Prepaid Card Market Size and Forecast by Functional Attribute Article content By Open Loop Teen and Campus Prepaid Card By Closed Loop Teen and Campus Prepaid Card Article content Canada Business and Administrative Expense Prepaid Card Market Size and Forecast Article content Business and Administrative Expense Prepaid Card Market Size and Forecast by Consumer Segments Article content By Small Scale Business Segment By Mid-Tier Business Segment By Enterprise Business Segment By Government Segment Article content Canada Payroll Prepaid Card Market Size and Forecast Article content Payroll Prepaid Card Market Size and Forecast by Consumer Segments Article content By Small Scale Business Segment By Mid-Tier Business Segment By Enterprise Business Segment By Government Segment Article content Canada Meal Prepaid Card Market Size and Forecast Article content Meal Prepaid Card Market Size and Forecast by Consumer Segments Article content By Small Scale Business Segment By Mid-Tier Business Segment By Enterprise Business Segment By Government Segment Article content Travel Forex Prepaid Card Market Size and Forecast by Consumer Segments Article content By Retail By Small Scale Business Segment By Mid-Tier Business Segment By Enterprise Business Segment By Government Segment Article content Canada Social Security and Other Government Benefit Programs Prepaid Card Market Size and Forecast Article content Canada Fuel Prepaid Cards Market Size and Forecast Article content Canada Virtual Prepaid Card Industry Market Attractiveness Article content General Purpose Prepaid Card – Transaction Value Gift Card – Transaction Value Entertainment and Gaming Prepaid Card – Transaction Value Teen and Campus Prepaid Card – Transaction Value Business and Administrative Expense Prepaid Card – Transaction Value Payroll Prepaid Card – Transaction Value Meal Prepaid Card – Transaction Value Travel Forex Prepaid Card – Transaction Value Transit and Tolls Prepaid Card – Transaction Value Social Security and Other Government Benefit Programs Prepaid Card – Transaction Value Fuel Prepaid Cards – Transaction Value Utilities, and Other Prepaid Cards – Transaction Value Article content Key Attributes: Article content Report Attribute Details No. of Pages 159 Forecast Period 2025 – 2029 Estimated Market Value (USD) in 2025 $26.26 Billion Forecasted Market Value (USD) by 2029 $32.61 Billion Compound Annual Growth Rate 5.6% Regions Covered Canada Article content For more information about this report visit About is the world's leading source for international market research reports and market data. We provide you with the latest data on international and regional markets, key industries, the top companies, new products and the latest trends. Article content Article content Article content Article content Article content Contacts Article content Article content
Yahoo
2 days ago
- Business
- Yahoo
Lakeland Industries Inc (LAKE) Q1 2026 Earnings Call Highlights: Record Sales Amid Margin Pressures
Net Sales: $46.7 million, a 29% year-over-year increase. US Net Sales: Increased 42% year-over-year to $22.5 million. Europe Net Sales: Increased 102% year-over-year to $12.1 million. Gross Margin: Decreased to 33.5% from 44.6% year-over-year. Adjusted EBITDA (excluding FX): $0.6 million, a decrease of $3.2 million from the previous year. Operating Expenses: Increased by $6.3 million or 45% to $20.3 million. Net Loss: $3.9 million or $0.41 per share, compared to net income of $1.7 million or $0.22 per share in the previous year. Cash and Cash Equivalents: $18.6 million as of April 30, 2025. Inventory: Increased by $3.1 million to $85.8 million. Capital Expenditures: $1.2 million, primarily for ERP system investment. Fire Services Revenue Growth: 100% year-over-year increase. Organic Revenue Growth: $600,000 or 2% increase to $36.9 million. Long-term Debt: $24.7 million as of April 30, 2025. Warning! GuruFocus has detected 4 Warning Signs with LAKE. Release Date: June 09, 2025 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Lakeland Industries Inc (NASDAQ:LAKE) achieved record net sales of $46.7 million, representing a 29% year-over-year increase. The company saw a 100% increase in fire services products, driven by recent acquisitions. Net sales in the US increased by 42% year-over-year, with organic US growth of 15%. European net sales increased by 102% year-over-year, indicating strong international growth. The company is implementing a new SAP ERP system to enhance and modernize operations, which is expected to support future growth and profitability. Gross profit as a percentage of net sales decreased to 33.5% from 44.6% year-over-year, due to lower margins from recent acquisitions and geographic revenue mix. Adjusted EBITDA, excluding FX, decreased by $3.2 million compared to the previous year, primarily due to higher manufacturing and freight costs. Operating expenses increased by 45% year-over-year, driven by acquisition expenses and higher organic operating costs. Net loss for the quarter was $3.9 million, compared to a net income of $1.7 million in the previous year. Tariff uncertainties caused regional sales delays, particularly in Canada and Latin America, impacting higher margin geographies. Q: Could you provide more details on the headwinds affecting gross margins this quarter and when we might see improvements? A: Roger Shannon, CFO, explained that the total increase in manufacturing costs impacted adjusted EBITDA by close to $3 million. A significant part of this relates to purchase variances flowing through COGS instead of being capitalized into inventory. This issue should reverse in Q2 and Q3 as inventory is sold through. The purchase accounting impact was about a 1% hit to gross margins, with about eight months left on Meridian and halfway through LHD. The cost variance impact was estimated at two to three margin points. Q: What factors contributed to the higher operating expenses, and are there any one-time costs we should be aware of? A: Roger Shannon noted that travel expenses were significantly up due to executive team visits to acquisition sites and the FDIC fire show. These are expected to decrease. SG&A labor costs increased year over year, and outbound freight costs were higher due to inventory movements related to tariff strategies. The company has identified $4 million in potential cost savings, focusing on SG&A discipline, optimizing procurement, and consolidating acquired companies. Q: Can you provide more insight into the growth opportunities in the fire services segment, particularly regarding the head-to-toe strategy? A: James Jenkins, CEO, highlighted increased engagement with customers and opportunities with larger clients, driven by the Meridian acquisition's glove strategy. The company is seeing growth opportunities globally, including a recent deal with the Korean fire department. The head-to-toe strategy involves offering a full range of products, such as helmets, turnout gear, boots, and gloves, to enhance customer engagement and sales. Q: What is the current status of the jolly order with the Italian government, and how does it impact your revenue expectations? A: James Jenkins stated that he will meet with the Italian government to discuss the timing of the jolly order delivery. The delay is due to internal changes within the Italian Ministry of Interior's procurement division. The company remains optimistic about the order, which is an important component of their revenue forecast. Q: How do you view your current inventory levels, and are there plans for further inventory build-up for tariff mitigation? A: Roger Shannon expressed confidence in the current inventory levels, noting that they are well-positioned for inventory from China and Vietnam. The company expects the tariff environment to improve, potentially settling at around a 10% level for Vietnam. They aim to work down inventory levels, particularly in the clean room capacity, which has been shifted from China to Vietnam. For the complete transcript of the earnings call, please refer to the full earnings call transcript. This article first appeared on GuruFocus. Error while retrieving data Sign in to access your portfolio Error while retrieving data Error while retrieving data Error while retrieving data Error while retrieving data
Globe and Mail
04-06-2025
- Business
- Globe and Mail
IGM FINANCIAL INC. ANNOUNCES MAY 2025 ASSETS UNDER MANAGEMENT & ADVISEMENT AND NET FLOWS
WINNIPEG, MB , June 4, 2025 /CNW/ - IGM Financial Inc. (IGM) (TSX: IGM) today reported record high total assets under management and advisement of $278.8 billion at , up 11.0% from $251.1 billion at May 31, 2024 . Total consolidated net inflows were $190 million during May 2025 . MAY HIGHLIGHTS IGM Financial – Record high assets under management & advisement were $278.8 billion up from $269.5 billion in the prior month. Investment fund net sales were $356 million up from net redemptions of $378 million in May 2024 . Total net inflows were $190 million up from net outflows of $302 million in May 2024 . IG Wealth Management (IGWM) – Assets under advisement were $143.7 billion up from $139.1 billion in the prior month. Record high Investment fund net sales were $250 million up from net redemptions of $127 million in May 2024 . Total net inflows were $65 million up from net outflows of $2 million in May 2024 . Mackenzie Investments – Record high assets under management were $221.0 billion up from $213.7 billion in the prior month. Investment fund net sales were $106 million up from net redemptions of $251 million in May 2024 . Total net sales of $125 million up from net redemptions of $300 million in May 2024 . Table 2 – Assets under Management and Advisement ($ millions) (unaudited) May 2025 April 2025 % Change Last Month Wealth Management IG Wealth Management Assets under management 126,845 122,505 3.5 % Other assets under advisement 16,834 16,546 1.7 % Assets under advisement 143,679 139,051 3.3 % Asset management Mackenzie Investments Mutual funds 61,459 59,351 3.6 % ETFs 8,305 7,896 5.2 % Investment funds 69,764 67,247 3.7 % Institutional SMA 11,630 11,155 4.3 % Sub-advisory to Canada Life 53,741 52,039 3.3 % Total Institutional SMA 65,371 63,194 3.4 % Total third party assets under management 135,135 130,441 3.6 % Sub-advisory and AUM to Wealth Management 85,820 83,305 3.0 % Total 220,955 213,746 3.4 % ETF's distributed to third parties 8,305 7,896 5.2 % ETF's held within IGM managed products 9,761 9,092 7.4 % Total ETFs 18,066 16,988 6.4 % Total Assets under management 261,980 252,946 3.6 % Other assets under advisement 16,834 16,546 1.7 % Assets under management and advisement 278,814 269,492 3.5 % Table 3 - Average Assets under Management and Advisement ($ millions) (unaudited) Quarter to date 2025 Wealth Management IG Wealth Management Assets under management 122,859 Other assets under advisement 16,551 Assets under advisement 139,410 Asset Management Mackenzie Investments Mutual funds 59,556 ETFs 7,914 Investment funds 67,470 Institutional SMA 11,524 Sub-advisory to Canada Life 52,068 Total Institutional SMA 63,592 Total third party assets under management 131,062 Sub-advisory and AUM to Wealth Management 84,543 Total 215,605 ETFs distributed to third parties 7,914 ETFs held within IGM managed products 9,221 Total ETFs 17,135 Total Assets under management 253,921 Other assets under advisement 16,551 Assets under management and advisement 270,472 1 Excludes sub-advisory to Canada Life and the Wealth Management segment. Glossary of Terms Assets Under Management and Advisement (AUM&A) represents the consolidated AUM and AUA of IGM Financial's core businesses IG Wealth Management and Mackenzie Investments. In the Wealth Management segment, AUM is a component part of AUA. All instances where the asset management segment is providing investment management services or distributing its products through the Wealth Management segment are eliminated in our reporting such that there is no double-counting of the same client savings held at IGM Financial's core businesses. AUM&A excludes Investment Planning Counsel's (IPC's) AUM, AUA, sales, redemptions and net flows which have been disclosed as Discontinued operations. Assets Under Advisement (AUA) are the key driver of the Wealth Management segment. AUA are savings and investment products held within client accounts of our Wealth Management segment core businesses. Assets Under Management (AUM) are the key driver of the Asset Management segment. AUM are a secondary driver of revenues and expenses within the Wealth Management segment in relation to its investment management activities. AUM are client assets where we provide investment management services and include investment funds where we are the fund manager, investment advisory mandates to institutions, and other client accounts where we have discretionary portfolio management responsibilities. Mutual fund gross sales and net sales reflect the results of the mutual funds managed by the respective operating companies, and in the case of the Wealth Management segment also include other discretionary portfolio management services provided by the operating companies, including separately managed account programs. ETF's represent exchange traded funds managed by Mackenzie. Institutional SMA represents investment advisory and sub-advisory mandates to institutional investors, pension plans and foundations through separately managed accounts. Other net flows and Other assets under advisement represents financial savings products held within client accounts in the Wealth Management segment that are not invested in products or programs where these operating companies perform investment management activities. These savings products include investment funds managed by third parties, direct investment in equity and fixed income securities and deposit products. Net flows represent the total net contributions, in cash or in kind, to client accounts at the Wealth Management segment and the overall net sales to the Asset Management segment. Wealth Management – Reflects the activities of operating companies primarily focused on providing financial planning and related services to Canadian households and represents the operations of IGWM. IGWM is a retail distribution organization that serves Canadian households through their securities dealers, mutual fund dealers and other subsidiaries licensed to distribute financial products and services. The majority of the revenues of this segment are derived from providing financial advice and distributing financial products and services to Canadian households. This segment also includes the investment management activities of these organizations, including mutual fund management and discretionary portfolio management services. Asset Management – Reflects the activities of operating companies primarily focused on providing investment management services, and represents the operations of Mackenzie Investments. Investment management services are provided to a suite of investment funds that are distributed through third party dealers and financial advisors, and also through institutional advisory mandates to pension and other institutional investors. Discontinued operations - Reflects the activities of Investment Planning Counsel. On April 3, 2023 , IGM Financial announced the sale of 100% of the common shares of Investment Planning Counsel Inc. for cash consideration of $575 million . The transaction closed on November 30, 2023 . ABOUT IGM FINANCIAL INC. IGM Financial Inc. ("IGM", TSX: IGM) is a leading Canadian diversified wealth and asset management organization with approximately $279 billion in total assets under management and advisement as of May 31, 2025 . The company is committed to bettering the lives of Canadians by better planning and managing their money. To achieve this, IGM provides a broad range of financial planning and investment management services to help approximately two million Canadians meet their financial goals. IGM's activities are carried out principally through IG Wealth Management and Mackenzie Investments and are complimented by strategic positions in wealth managers Rockefeller Capital Management and Wealthsimple and asset managers ChinaAMC and Northleaf Capital. These strengthen IGM's capabilities, reach and diversification. IGM is a member of the Power Corporation group of companies. For more information, visit
Yahoo
28-05-2025
- Business
- Yahoo
Semtech Corp (SMTC) Q1 2026 Earnings Call Highlights: Record Growth in Data Center Sales and ...
Net Sales: $251.1 million, up 22% year over year. Adjusted Gross Margin: 53.5%, up 30 basis points sequentially and 370 basis points year over year. Adjusted Operating Income: $47.6 million, with an adjusted operating margin of 19%, up 680 basis points year over year. Adjusted EBITDA: $55.4 million, up 68% year over year, with an adjusted EBITDA margin of 22.1%, up 600 basis points year over year. Adjusted Diluted Earnings Per Share: $0.38, up from $0.06 a year ago. Operating Cash Flow: $27.8 million. Free Cash Flow: $26.2 million. Net Debt: Decreased by $14.8 million to $396.2 million. Infrastructure Net Sales: $72.8 million, up 5% sequentially and 30% year over year. Data Center Net Sales: $51.6 million, up 3% sequentially and 143% year over year. High-End Consumer Net Sales: $35.4 million, flat sequentially and up 3% year over year. Industrial Net Sales: $142.8 million, down 3% sequentially and up 24% year over year. LoRa Enabled Solutions Net Sales: $38.9 million, up 5% sequentially and 81% year over year. IoT Systems Hardware Net Sales: $63.5 million, down 8% sequentially and up 31% year over year. Warning! GuruFocus has detected 9 Warning Signs with SMTC. Release Date: May 27, 2025 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Semtech Corp (NASDAQ:SMTC) reported Q1 net sales of $251.1 million, exceeding the midpoint of their outlook and marking a 22% year-over-year increase. The company's adjusted gross margin improved to 53.5%, up 370 basis points year over year. Infrastructure net sales grew by 30% year over year, with data center sales reaching a record $51.6 million, up 143% year over year. Semtech's CopperEdge technology offers significant power savings and extended reach, positioning it as a strong solution for next-generation AI clusters. The company has made strides in portfolio optimization and strategic R&D investments, aiming to drive margin expansion and shareholder value. The IoT systems hardware business saw an 8% sequential decline in net sales, although it was still up 31% year over year. Gross margins in the cellular module business were down both quarter-on-quarter and year-on-year, partly due to a mix shift and a one-time inventory event. LoRa net sales are expected to decline slightly in the next quarter, despite strong year-over-year growth. The company faces macroeconomic uncertainties that may impact the timing of some portfolio optimization initiatives. There was a noted air pocket in demand for CopperEdge due to platform changes with an anchor customer, affecting short-term revenue. Q: Can you explain the decline in the cellular module business and the impact on gross margins? A: Hong Hou, President and CEO, explained that the decline was expected due to seasonality in the IoT system product. Despite this, the business is experiencing significant tailwinds from competitors being sanctioned and exits from the IoT cellular business. Mark Lin, CFO, added that the gross margin decline was due to a mix shift towards modules and a one-time inventory event affecting margins. Q: Could you provide more details on the progress and visibility around AI connectivity, specifically CopperEdge? A: Hong Hou stated that CopperEdge has been well-received, with over 20 customer engagements. The product offers advantages like low power consumption and low latency. They expect meaningful design wins and volume ramps by Q4 of this fiscal year. Q: What is the outlook for the LPO and optical business, particularly regarding TIAs and drivers? A: Hong Hou noted that Semtech's TIA is considered the industry gold standard, with design wins across module manufacturers. The LPO is expected to see deployments in the second half of the fiscal year, with the driver being fully compliant with MSA specifications, leading to additional revenue by Q4. Q: How do you see the core data center business trending over the next 6 to 12 months? A: Hong Hou expressed optimism about the FiberEdge product line, which continues to show growth. The company expects accelerated growth in the second half of the year, driven by strong booking activities and increased CapEx spending in the industry. Q: Can you elaborate on the expected performance of LoRa in the coming quarters? A: Mark Lin mentioned that LoRa's Q1 performance was strong, with expectations of a $30 million to $35 million quarterly run rate. The slight decline in Q2 is attributed to project-based spending and customer builds for product launches, but the overall business remains robust. Q: What are the expectations for AI connectivity, specifically CopperEdge, in the coming quarters? A: Hong Hou indicated that while demand from the anchor customer is lower, engagements with other customers are promising. They expect revenue from these engagements to start in Q4 and ramp up in the next fiscal year. Q: How is the company addressing macroeconomic uncertainties and tariff impacts? A: Hong Hou explained that while macroeconomic uncertainties may delay strategic initiatives, the company remains focused on improving business performance and creating shareholder value. Tariff impacts are being mitigated through operational coordination. Q: What is the outlook for the high-end consumer market, particularly regarding the SurgeSwitch product? A: Hong Hou highlighted that SurgeSwitch offers system-level protection and is being designed into multiple customer systems. It provides robust protection for Type-C connectors, which are increasingly used across various industries, offering noticeable ASP improvements. For the complete transcript of the earnings call, please refer to the full earnings call transcript. This article first appeared on GuruFocus. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
24-05-2025
- Business
- Yahoo
AA owners line up banks to steer path towards £4.5bn exit
The owners of the AA, Britain's biggest breakdown recovery service, are lining up bankers to steer a path towards a sale or stock market listing next year which could value the company at well over £4bn. Sky News has learnt that JP Morgan and Rothschild are in pole position to be appointed to conduct a review of the AA's strategic options following a recovery in its financial and operating performance. The AA, which has more than 16 million customers, including 3.3 million individual members, is jointly owned by three private equity firms: Towerbrook Capital Partners, Warburg Pincus and Stonepeak. Insiders said this weekend that any form of corporate transaction involving the AA was not imminent or likely to take place for at least 12 months. They added that there was no fixed timetable and that a deal might not take place until after 2026. Nevertheless, the impending appointment of advisers underlines the renewed confidence its shareholders now have in its prospects, with the business having recorded four consecutive years of customer, revenue and earnings growth. A strategic review of the AA's options is likely to encompass an outright sale, listing on the public markets or the disposal of a further minority stake. Stonepeak invested £450m into the company in a combination of common and preferred equity, in a transaction which completed in July last year. That deal was undertaken at an enterprise valuation - comprising the AA's equity and debt - of approximately £4bn, the shareholders said at the time. Given the company's growth and the valuation at which Stonepeak invested, any future transaction would be unlikely to take place with a price of less than £4.5bn, according to bankers. The AA, which has a large insurance division as well as its roadside recovery operations, remains weighed down by a substantial - albeit declining - debt burden. Its most recent set of financial results disclosed that it had £1.9bn of net debt, which it is gradually paying down as profitability improves. AA owners over the years The company has been through a succession of owners during the last 25 years. In 1999, it was bought by Centrica, the owner of British Gas, for £1.1bn. It was then sold five years later to CVC Capital Partners and Permira, two buyout firms, for £1.75bn, and sat under the corporate umbrella Acromas alongside Saga for a decade. The AA listed on the London Stock Exchange in 2014, but its shares endured a miserable run, being taken private nearly seven years later at little more than 15% of its value on flotation. Under the ownership of Towerbrook and Warburg Pincus, the company embarked on a long-term transformation plan, recruiting a new leadership team in the form of chairman Rick Haythornthwaite - who also chairs NatWest Group - and chief executive Jakob Pfaudler. For many years, the AA styled itself as "Britain's fourth emergency service", competing with fierce rival the RAC for market share in the breakdown recovery sector. Founded in 1905 by a quartet of driving enthusiasts, the AA passed 100,000 members in 1934, before reaching the one million mark in 1950. Last year, it attended 3.5 million breakdowns on Britain's roads, with 2,700 patrols wearing its uniform. The company also operates the largest driving school business in the UK under the AA and BSM brands. In the past, it has explored a sale of its insurance arm, which also has millions of customers, at various points but is not actively doing so now. By recruiting a third major shareholder last, the AA mirrored a deal struck in 2021 by the RAC. The RAC's then owners - CVC Capital Partners and the Singaporean state fund GIC - brought the technology-focused private equity firm, Silver Lake, in as another major investor. A spokesman for the AA declined to comment on Saturday.
