Insurance and holidays provider for the over-50s Saga (SAGA) nudges ahead 0.25p to 185.25 as conditional dealing kicked off in what can be described as a disappointing start to life as a quoted company.

The float was priced at 185p a share, which was the bottom of its 185p-245p range to get the deal away after institutions believed it was overpriced. Nevertheless, Saga should qualify for the FTSE 250 later this year as it is valued at £2.1 billion upon admission.

The problem is that the majority of Saga’s income is generated from insurance, as we discuss in this story. In trying to get more cash for their shares private equity firms Permira, Charterhouse and CVC touted the company to institutions as a consumer goods company, but they were not fooled.

This didn’t deter retail investors. The 50% allocated for private investors was over-subscribed, resulting in two-thirds only receiving half the shares they requested. The offer of a free share for every 20 bought may have proved attractive.

The saga of Saga’s initial public offering (IPO) is the latest hint that enthusiasm in the new issuances market is waning. Clothing brand Fat Face scraped its plans to go public and the disappointing aftermarket for white goods seller AO World (AO.) and take-away payments service Just Eat (JE.).

Issue Date: 23 May 2014