Saga Customers Lined Up To Back £3bn Float

By Mark Kleinman, City Editor

The owners of Saga, the travel and insurance provider for the over-50s, are preparing to revive a six-year-old plan to float the company that would include one of the largest share offers to retail investors for years.

Sky News understands that Acromas Holdings, Saga's parent company, will begin formal discussions with banks before the end of the year about a stock market listing that would probably take place in 2014.

The City has speculated for months that Saga and the AA, the roadside recovery service that is its sister company, would go their separate ways more than six years after they were united in one of the UK's biggest private equity deals.

Charterhouse, CVC Capital Partners and Permira, the buyout firms which own the bulk of Acromas, have not yet made a formal decision about whether to split the group.

However, people close to the shareholders say that banks have been encouraged to prepare proposals for a public share sale at Saga that could see as much as 50% of the company sold to its customer base.

"The company has made it clear that it will want a retail offering to comprise a big chunk of any initial public offering," said one insider.

A listing would be likely to raise funds to pay down the company's debts and could value it at as much as £3bn.

Saga, which was founded in 1959, has 2.7m customers and its brand has become synonymous with products tailored to the so-called grey market. Last year it launched a fixed-price legal service for will writing, Power of Attorney, probate, and conveyancing for those moving home.

Investment banks are expected to be asked to formally pitch for the mandate to work on the flotation of Saga during the autumn.

Such a move has been made possible by a refinancing of the £7bn debt mountain earlier this year which involved securitising the AA's future membership revenues.

An Acromas spokesman said that "no options had been ruled in or out" in relation to the future of the group.

The AA could be sold or floated separately, although an IPO of the company could be complicated by competition from Carlyle, another private equity group, which may seek to float the RAC as soon as next year.

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