Private Investor: The future is grey - and bright - for the Saga empire
Saturday 18 September 2004
The Old People's Travel Bureau has come along way, hasn't it?
The Old People's Travel Bureau has come along way, hasn't it? You don't recognise the name? No, of course not, because it is much better known now as Saga. It was founded, I discover, in 1951 by Sidney De Haan, who first operated the business from a hotel bedroom. As we all can see, Saga has built itself a very lucrative and respected business since those small beginnings, and somehow not suffered too much form the music-hall jokes about it. I don't think being older is necessarily a bad thing, and one of the most cringeworthy things I can think of is to listen to some young oik dismiss someone with age and experience as "just an old man". And that isn't just because I'm going grey. We're none of us getting any younger, are we?
In any case, the De Haan family is interested in refloating Saga on the stock market and I am jolly excited at the prospect. A look at the company's website shows it has branched out into financial services (eg Saga Pet Insurance), broadcasting (Saga FM), car sales (Saga Cars Direct) and even advice about sex. For example, when researchers studied middle-aged men in Caerphilly, Wales, over a 10-year period, they found that the death rate for the least sexually active men was twice as high as that of the most active. The lowering of risk was particularly marked when it came to heart attacks, leading scientists to endorse the idea that sex can be excellent exercise. Not just in Caerphilly, I hope.
But I digress. The point is that the Saga brand is very well known and ripe for greater exploitation. The core business ought to benefit from a gradually ageing British population. What is less remarked upon is the fact that the generation presently enjoying consistent double-digit house-value increases, and thus an astonishing inflation in the value of their principal asset, are those who in a decade or so may well be turning to Saga for their cruise of a lifetime, insurance for the new pets they didn't have time for before they retired, and that nice new or classic car they always promised themselves. And they will be well placed to cash in on their family home to finance a happy and luxurious retirement.
After all, you can't take it with you, and if you don't blow it, the chances are that the local authority or the Exchequer will grab it to pay for nursing care or inheritance tax. With every Budget Gordon Brown closes another wealth-preserving loophole and that means an ever greater incentive just to go crazy on that Saga cruise. I know pensioner poverty and near-poverty is a real problem, but there are many people over the age of 60 who have never had it so good. I think we should all be able to share in their success.
So it is a little disturbing to read press reports suggesting that the public offer of shares may not actually happen, and that the whole exercise is a way of ramping the private equity funds into paying a better price for the business when it goes to them on a private basis. It is a little reminiscent of the postponed public flotation of William Hill in 1999, which eventually did go ahead and came very good for those, like me, who joined in when the shares were issued in 2002. I took my profits on William Hill after they had appreciated about 50 per cent, so it was rather a good gamble.
Much more encouraging is the statement from Saga's chief executive about the future: "We are not doing this to create competitive tension [among private equity bidders]. We are writing to three million people in the next couple of days ... because there was a feeling that a float had a real opportunity of delivering significant shareholder value. We are trying very hard to manage customers' expectations by telling customers up front what we are doing. There is a prospect of telling people we may not be floating."
Well, whatever happens, there seems no harm in registering for the share offer, as I have, by visiting www.saga.co.uk, and there is no age limit on applications. No word on the price yet, of course, but let's hope this saga has a happy ending.
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