Private Equity Owners to Sell Saga’s Shares


February 27, 2015

The private equity vehicle, Acromas, announced on Thursday that it has sold some of its shares in the over-50s lifestyle group Saga. The firm said two new institutional investors have bought the shares in a deal worth over £200 million.


The private equity vehicle announced it has sold 10% stake in the company. Saga has been going through a tough period since its initial public offering (IPO) last year. The private equity firms Charterhouse, Permira and CVC use Acromas as a vehicle to hold their shares. The vehicle also controls the stakes the private equity firms have in AA, which also floated during last year. Bank of America Merrill Lynch, which also completed Saga’s IPO procedure last year, was in charge of the share placing.


Valuation worries
According to the Telegraph, one of the new investors has taken a 4% stake in the company, which mean the investor is now among Saga’s biggest shareholders. The private equity vehicle continues to have a 62% stake in the company. The investor was not named in any of the reports on Thursday. Furthermore, the vehicle first announced it is only selling 4% stake, but later agreed to sell another 6%.


The reports said the firm received a minimum of 185 pence a share, which is around the share price it chose during its IPO in May last year. The shares have been on the decline, but have shown recovery during the last few weeks. When valuing the company, the problem for many analysts trying has been in figuring out under what sector to evaluate the price. Sage generates most of its profits as an insurer, but it also has plenty of operations as a consumer service. These consumer service businesses typically attract a higher valuation as it has multiple earnings opportunities.


Legal Procedures
According to the Telegraph, the private equity firms are now unable to trade any remaining Saga shares during a period from March 1 until the results are announced in late April. This will ensure institutions are locked out from the company, since freely-traded shares are mostly in the hands of individual investors. These investors will receive bonus shares if they hang on to the shares for at least a year.


The vehicle released an official statement on Saga’s website saying, “The sale is subject to demand, price and market conditions. The identity of Placees and the basis of the allocations are at the discretion of Acromas and BofAML. The price at which the Placing Shares are to be placed will be agreed by Acromas and BofAML at the close of the bookbuilding process.” The stock market rules dictate that the identities of the new institutional investors will be named in the following days.


There have been plenty of buyouts in the insurance industry in recent months and private equity firms currently in charge of these assets have been able to capitalise on the industry interest. It remains to be seen whether further big deals will take place in the following months.

Share on FacebookTweet about this on TwitterShare on Google+Share on LinkedIn