Saga sets the bar low amid fears over floats


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The Independent Online

Saga priced its £2bn stock market listing at the bottom of its original range last night, in the latest sign of weakness in an increasingly turbulent market for initial public offerings.

Shares in the over-50s insurer will be sold at 185p apiece, according to sources close to the company, as its private equity owners – Permira, Charterhouse and CVC – look to raise £550m.

Almost 700,000 Saga customers have indicated an interest in buying its shares but City institutions had been warning that the price, which originally valued the company at as much as 18 times forward earnings, was too high.

Concerns that the IPO market is peaking were fuelled after the clothing retailer Fat Face, which is chaired by the Ocado chairman Sir Stuart Rose, yesterday pulled its flotation because of "current equity market conditions".

However, companies are still queuing up to join the London Stock Exchange. Yesterday the online property group Zoopla was one of four companies to announce their intention to float.

Zoopla, which owns property websites such as PrimeLocation and SmartNewHomes, was the highest-profile debutant with a likely valuation of around £1bn. A float would bring a windfall for the Daily Mail publisher Daily Mail & General Trust, which owns a near 53 per cent stake.

Other IPOs announced yesterday included the Liverpool-based discounter B&M European Value Retail, which is chaired by Tesco's former chief executive, Sir Terry Leahy, and could be worth £2bn.

Also stepping up was the Hungarian low-cost airline Wizz Air, with a mooted valuation of £1.2 bn. The boutique fund manager River and Mercantile was the fourth new entrant, with a possible value of up to £200m.

Zoopla's chief executive, Alex Chesterman, played down concerns about the IPO market becoming saturated, saying: "We think there is significant investor interest in our business, which is high growth and high margin," Mr Chesterman's 8 per cent stake is potentially worth £80m.

He insisted that Zoopla was not vulnerable if the housing market ran into problems. "The property market is still substantially below where it was in the early 2000s," he said, "in terms of transactions and even pricing."