Another industry source, Financial News, has picked up this story with the news that Saga have confirmed their plans as well as giving an estimated valuation of the business.
The website confirmed that Saga will float on the London Stock Exchange, with the initial listing set to value the company between £2billion and £2.5billion. This puts the expected price range of shares between 185 – 245 pence (1.85 – 2.45 GBP) based on a statement released by Saga. Investors or Saga customers that are interested in buying shares in the business can apply on the Saga website.
Saga states that all applications for shareholding must be made by 20th May, with conditional trading expected to start on May 23rd. In a separate report on the same matter, Bloomberg states that money managers will be able to order shares until May 22nd.
It is believed that between 25 – 50% of the company will be publicly listed following the IPO. Financial News reported Saga Chairman Andrew Goodsell as saying, “Today’s announcement reflects the strong level of investor interest shown in acquiring Saga shares, which we believe underlines the potential that exists in the company. As previously reported by ourselves and other sources, Saga plans for the IPO to raise in the region of £550million, which will then be used to reduce the net debt of the business.
Net debt is currently believed to stand at 1.25billion, therefore a successful IPO followed by the sale of the remainder of the shares in a later offering is likely to leave Saga with very little net debt remaining.
This IPO represents the beginning of an exit for the business’s private equity owners. Acromas – Saga’s parent company – is owned primarily by three private equity giants in Charterhouse Capital Partners, CVC Capital Partners, and Permira, although employees of the company also hold stakes.
With at least 50% of the company continuing to be held privately following the sale, Acromas will still hold some shares in the business, but it is unknown to what extent each of the individual private equity firms will retain an interest.
If the IPO is well received and raises the amount of money it is expected to, or exceeds expectations, it is likely that the private equity houses will push to make the remainder of their own shares publicly traded ones, too.
Should the share price dip after floatation, they may hold onto them and sell at a better price later. With Saga stating that as many as 700,000 customers were interested in buying shares in the business, it is likely that the share price will hit the higher end of the scale quoted.
The price may even go higher than this, given that initial reports at the end of April had the IPO listing giving Saga a value closer to £3billion rather than £2billion – £2.5billion.