Preparing to launch stock market Saga

WITH more than 2.7m customers and a business that provides everything from cruises to pensions and insurance, Saga is a household name and a trusted brand.

So the news that its private equity owners are preparing the over-50s group for the cut-andthrust world of the stock market is likely to strike a chord with its legions of loyal customers.

Permira, CVC and Charterhouse are seeking financial advisers to engineer a £3bn flotation of Saga as early as the first quarter of 2014.

This would mark the break-up of acromas, formed in 2007 when the private equity houses merged Saga and the aa in a £6.2bn deal.

a float could well be followed by the sale of aa, which has already received an approach from potential bidders including oceanBridge, an investment group set up by two former Permira partners.

There are often concerns when a company is listed that it will lose sight of its customers – and slav- ishly serve the interests of shareholders. But when the company is already owned by three heavily indebted private equity firms, customers may be less squeamish about the prospect of an IPo.

Some commentators believe the float may be a good thing for both the business and its customers.

Despite a restructuring of its finances over the summer, acromas is still weighed down by around £4.6bn of debt from the merger of aa and Saga.

The good news for Saga is that the restructuring – which paved the way for its float – left the majority of this debt with the aa. This also bought the over-50s group more time, with the deadline for its repayments extended from September 2015 to September 2017. But it still owes £1.5bn – no trifling amount.

Critics have said the debtfuelled private equity merger of aa and Saga has not been beneficial for Saga’s customers. Tellingly, none of its flagship products, including car and home insurance, feature on the ‘recommended providers’ list of influential consumer group Which?.

Earlier this year campaign group the National Pensioners Convention accused Saga of taking advantage of elderly customers by charging them more for their home insurance than new customers.

one customer told BBC Radio 4’s Money Box programme: ‘you think of Saga looking after the over-60s. I couldn’t believe they would treat elderly pensioners like that.’ last night an industry expert said a move to the stock market could actually be good f or customers.

‘Saga has got a fantastic brand – but it has been trading on its name for years rather than providing great products. Currently it is run so obsessively with the short-term bottom line in mind. The sales volumes are tiny compared with its potential. There is a real opportunity here for Saga to become a leading brand by demonstrating its customer care and values.’

The boss of acromas, andrew Goodsell, has argued the muchcriticised tie-up of Saga and the aa has been a successful marriage. Despite reporting a pre-tax loss of £574.8m in the year to January 31, group sales rose 6.4pc to £2.3bn. The group has grown by 50pc since 2007.

Travel, which links largely to Saga, saw sales rise from £345.5m to £353.3m. Financial services, driven by both brands, rose 1.2pc to £771m.

But for most people, the real concern will be about the impact a stock market float will make on Saga’s customers. The truth is no one knows.

last night an acromas spokesman said: ‘We do not comment on market speculation and are focused on serving our customers.’