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Customers come first as Saga poised to go public in £2.5bn float

Over-50s insurer Saga Group will come to market with an expected market cap of between £2 and £2.5bn, it emerged today.

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Over-50s insurance and holiday group Saga will come to market with an expected market cap of between £2bn and £2.5bn, it emerged today.

The expected offer price range for the shares is set at between 185p and 245p, the company said today.

By way of comparison, Royal Mail's (LON:RMG) much trumpeted debut last October, gave it a value of £3.33bn when it first listed.

The size of the IPO is expected to deliver a free float of between 25% and 50% of the group's capital and the proceeds of around £550 million will be used to reduce the firm's net debt to around £700 million.

As reported at the tail end of last month, the group has given its customers preference over other retail investors.

It said existing Saga customers and employees will be offered the perk of one free share for every 20 bought. The minimum application for shares is £1,000 worth.

The group's executive chairman Andrew Goodsell said: "We have also been enormously pleased with the positive response from customers to the announcement that we intend to IPO the business and are looking forward to further strengthening our relationship with customers by allowing them to invest in the business.

"We are fortunate to have a discerning customer base that can see the long-term strength of the Saga brand. Today's announcement is a further important step in our journey toward becoming a public company with our customers and employees at the heart of it."

Saga has said its stock will sit in the specialised consumer services sector even though almost three-quarters of its earnings come from insurance.

It has thus avoided a listing in the insurance sector, which City institutions had claimed would make the shares look pricey against its rivals.

Last year, Saga generated underlying revenues of £1.2bn and underlying EBITDA (earnings) of £222mln.

It is planning on launching a progressive dividend policy, with an initial pay-out ratio of 40-50% of the group’s net income.

Quick facts: Saga Group

Price: 44.8 GBX

LSE:SAGA
Market: LSE
Market Cap: £502.66 m
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