Over-50s insurance-to-travel provider Saga has confirmed plans to float on the stockmarket, potentially valued at $3.7 billion. Retail investors will be able to take part in the IPO (initial public offering) as long as they apply for at least £1,000 worth of stock. Saga customers will also get one free share for every 20 acquired in the offer, on the condition they hold the stock for at least 12 months, the same applying to staff.
Saga customers and staff will get priority in the IPO for shares over other members of the public. Further details can be found via this link.
The business will be classified as a general retailer, slotted into the specialised consumer FTSE sub-sector, alongside such constituents as funeral services provider Dignity (DTY). This may seem slightly odd as it is best known for insurance. Yet the group's offering is much broader, hence why it doesn't want to be pigeon-holed on the stockmarket against pureplay insurers.
Saga started out in travel and then added magazine publishing, insurance and financial services in the 1980s. This was followed by private medical and pet insurance, together wih its own cruise ship operation in the 1990s. Since then, the travel business has continued to grow and Saga has moved into healthcare.
This table shows the financial performance over the past three years. In the first two months of its current financial year, the financial services, travel and healthcare segments have performed strongly with revenue ahead of its expectations. Saga adds: 'In line with our expectations, financial services revenue is lower than the same period last year as the lower market premium levels experienced in motor (insurance) in the prior year continue to pass through into the first quarter of the current financial year '
Saga expects to raise £550 million from the primary offering to reduce net debt to circa £700 million. The company refinanced its financial indebtedness in April 2014, putting in place new term loan facilities in an aggregate amount of £1.25 billion and a multi-currency revolving credit facility in an aggregate amount of £150 million. Private equity consortium Acromas will sell part of its holding in the IPO.
The company plans to pay dividends, equal to between 40% and 50% of group net income.
Former Domino's Pizza (DOM) boss Lance Batchelor is the chief executive of Saga. The old CEO Andrew Goodsell is now chairman. Non-executive directors include Ray King, the former boss of Bupa and Philip Green, previously CEO of United Utilities (UU.).
