Saga is cruising onto the stockmarket with a £2.2bn IPO

IPO WATCH: The insurance and travel group for the over-50s wants to raise £550m with a public listing.

by Rachel Savage
Last Updated: 15 Oct 2015

The rumour mill is getting things pretty spot on at the moment, with over-50s insurance and travel company Saga the latest to emerge from the shadows to officially declare its intention to list on the London Stock Exchange.

Saga, which also has a dating agency and an eponymous magazine featuring such silver fox cover stars as Pierce Brosnan, is planning to raise £550m by floating at least 25% of the company, which will be used to pay down debt. That values the company at around £2.2bn.

Private equity owners Charterhouse, CVC and Permira will finally get to start offloading their stakes when the company floats, likely to be by the end of May according to the FT. They bought Saga with the AA, which they combined under parent company Acromas in a nifty 2-for-1 deal, for £6.3bn back in 2007.

Shares are also on offer to Saga’s 2.1 million customers, 700,000 of whom have expressed an interest. Wannabe retail investors will need to put down at least £1,000 to get a slice of the silver pie.

The company has come a long way since it started out offering out-of-season holidays in 1950 in the seaside town of Folkestone. Underlying earnings (EBITDA) were £222.4m on revenues of £1.2bn in the year to the end of January.

With that pensionable history and an ageing population behind it, Saga is a reassuringly solid business, unlike some of the faster growing, flashier internet companies like AO World and Just Eat (which announced today it is already moving off the LSE’s ill-fated High Growth Segment, leaving it empty a year after it was launched) that have exploded on to the stockmarket recently and are now trading below their offer prices.

However, even recently listed bricks and mortar retailers like Poundland and Pets at Home have slumped after exuberant debuts. Saga will be hoping that its eight advisors, who include JP Morgan, Citi, UBS and Goldman Sachs - a veritable who’s who of Wall Street, are saving for their futures rather than going for a short term win.

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