PE-backed Saga raises £550m in IPO

Ellie Pullen
23 May 2014

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Over-50s UK insurance group Saga, backed by Charterhouse, Permira and CVC, has raised ТЃ550m in its IPO, giving the company a market cap of ТЃ2.1bn.

The company sold 297.3 million shares at a price of 185 pence apiece – the bottom of the initial indicative price range – resulting in a free float of 27% at admission.

Acromas – the holding company owned by Charterhouse, CVC, Permira and employees of the group – has granted an overallotment option comprising 44.6 million additional shares which, if exercised in full, would net the consortium a total of £82.5m.

If the overallotment option is not exercised, Acromas will retain a shareholding of 72% in Saga following admission to the stock market.

Interest in the stock has been drummed up by Saga's emphasis on selling shares to its customers. Retail investors including Saga's customers were allocated 50% of the offer, with the balance going to institutions.

Condition dealings began today on the London Stock Exchange under the ticker "SAGA". Admission to the main market will take place on Thursday 29 May. Citigroup Global Markets is acting as sole sponsor, joint global coordinator and joint bookrunner for the flotation. Bank of America Merrill Lynch, Credit Suisse Securities and Goldman Sachs are acting as joint global coordinators and joint bookrunners, while JP Morgan Cazenove and UBS have been appointed joint bookrunners.

News of Saga's potential flotation emerged as early as October last year, although at the time reports suggested the company would reach a market cap of £3bn.

Previous investment
CVC and Permira merged car breakdown recovery service AA with Saga in June 2007. Charterhouse acquired Saga in 2004, in a £1.35bn deal. CVC and Permira picked up AA that same year for £1.75bn.

Company
Saga was founded in 1959 and is headquartered in Folkstone. The company claims to have more than 2.1 million customers.

In April, Saga refinanced its debt by putting £1.25bn of new term loan facilities in place, as well as a £150m multi-currency revolving credit facility. For the 12 months ending January 2014, the insurer generated revenues of £1.2bn and an EBITDA of £222.4m with a margin of 18.4%.

People
Lance Batchelor is the group CEO of Saga.