UPDATE 3-AA's private equity owners speed to exit with sale and IPO

* Owners strike deal to sell 69 pct stake ahead of IPO

* Listing later in June expected to value AA at 1.4 bln stg

* Follows troubled flotation of sister company Saga (Adds detail on management buy-in)

By Freya Berry and Anjuli Davies

LONDON, June 6 (Reuters) - The private equity owners of theAA have struck a deal to sell a 69 percent stake in the Britishmotoring organisation ahead of a planned flotation later thismonth, hoping to side-step the problems they had listing sistercompany Saga in May.

Permira, Charterhouse and CVC said on Friday a group of investors had committed to buying thestake for 250 pence a share, or 930 million pounds ($1.6billion).

The AA, best known for its roadside recovery services, willfloat in London in the second half of June at the same price,with the sale of new shares and the remaining stake of theprivate equity firms expected to give it a market value ofaround 1.39 billion pounds.

Permira, Charterhouse and CVC faced a string of problemswhen they listed sister-company Saga in May, includingcontroversy over its classification as a specialist retailerrather than an insurer.

The stock priced at the bottom of its expected range and hassince fallen well below its issue price of 185 pence,disappointing thousands of Saga customers who bought into thelisting.

The poor appetite also meant Permira, Charterhouse and CVCdecided not to sell any shares, leaving them struggling for anexit from an investment already seven years old. Private equityfirms generally try to get out of their investments four to sixyears after buying in.

They will sell their stakes to a management buy-in team ledby Bob Mackenzie, a former boss of car insurer Green Flag who isto become AA's executive chairman, backed by institutionalinvestors.

Those investors, who will take on AA's roughly 3 billionpounds of debt, include Aviva Investors, Blackrock, CRMC, GLG Partners, Henderson Global,Henderson Volantis, Invesco, Legal and General andLansdowne Partners.

"The AA is a fundamentally strong business and underpinningour approach is a clear strategy to invest in systems and newtechnologies to further enhance the service provided to ourmembers and customers, to steadily reduce the AA's existing debtand to develop the growth opportunities that we haveidentified," Mackenzie said in a statement.

COOLING IPO MARKET

A previously hot market for initial public offerings (IPOs)has cooled somewhat in recent weeks, with fashion chain Fat Facepulling its listing the day before Saga's debut.

However the market still has some jumbo debuts in thepipeline, including that of ING's insurance arm NNGroup, expected to be one of the biggest European IPOs of theyear.

The AA will offer up to 554 million new and existing sharesin its flotation, it said, without breaking out exactly how manyof each.

The shares will be sold in a so-called accelerated publicoffering at the announced price, rather than through abookbuilding process which allows investors to bid across arange of prices and can take several weeks to complete.

Permira, Charterhouse and CVC have owned the AA since 2007,when they merged it with Saga into parent company Acromas in a6.15 billion pound deal.

RAC

The AA is the UK's biggest motoring organisation androadside recovery service, with around 16 million members. Italso offers motor and home insurance and a driving school.

The firm, which says it rescues a broken-down vehicle everynine seconds, had earnings before interest, tax, depreciationand amortisation (EBITDA) of 422.8 million pounds in the year toJan. 30. Pretax profit was 214.6 million, down from 312.7million the year before because of an increase in finance costs.

An enterprise value (equity plus debt) of 4 billion poundswould value the AA at almost 19 times pretax earnings.

Rival RAC, owned by U.S. private equity group Carlyle, is also considering an IPO this year in a deal thatmedia reports have said could value the company at 2 billionpounds. RAC had pretax earnings of 98 million pounds in 2011.

Carlyle has appointed Barclays and Goldman Sachs to work on the flotation, an industry source said. RAC'schairman Rob Templeman plans to step down if the company goespublic, the source said, adding recruitment firm Korn Ferry hadbeen asked to look for a replacement.

($1 = 0.5957 British Pounds) (Additional reporting by Esha Vaish and Tasim Zahid inBangalore; Editing by David Goodman and Mark Potter)