Saga IPO Raises $926.7 Million; Share’s Price at Bottom of Range

May 23, 2014

Saga Plc, a provider of insurance and holidays to Britain’s over-50s, raised £550 million ($926.7 million) after selling shares at the bottom of the range used to canvass investor interest.

The shares were sold at 185 pence [$3.117] apiece, the Folkestone, England-based company said in a statement today. It had initially planned to sell stock for as much as 245 pence [$4.12] each. Trading on the London Stock Exchange starts today.

Saga’s pricing comes amid waning appetite for new issuance in London following the underperformance of several private equity-backed companies after share sales in the past 12 months. Infinis Energy Plc and Pets at Home Plc are both trading below their respective initial public offering prices. U.K. retailer Fat Face Group Ltd. canceled its planned share sale yesterday.

Saga has said the initial public offering would value the company at £2.1 billion [$3.538 billion] and that it would spend the proceeds to reduce debt. Charterhouse Capital Partners LLP, CVC Capital Partners Ltd. and Permira Advisers LLP, which have owned Saga since 2007, won’t sell their existing stock at the bottom of the range, people with knowledge of the matter said yesterday.

Saga Executive Chairman Andrew Goodsell has said that the company will be classified as part of the specialized consumer services industry, even though most of its earnings come from home and motor insurance.

Citigroup Inc., Bank of America Corp., Credit Suisse Group AG, Goldman Sachs Group Inc., JPMorgan Cazenove and UBS AG managed the offering, along with Investec Bank Plc and Mizuho International Plc.

Charterhouse acquired Saga from its founding family in 2004, a deal that valued the company at about £1.35 billion [$2.275 billion]. Three years later, it teamed up with Automobile Association Ltd., owned by CVC and Permira, in a £6.2 billion [10.446 billion] deal. That merger was reversed last year in preparation for a sale. The buyout firms still own the AA.

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