Saga starts life in big league with a whimper as City cools on listings

 

Flotation fatigue deepened across the City yesterday as Saga began life as a listed company with a whimper. 

The over-50s cruise and financial services group had priced its shares at 185p. They rose to 189p before falling back to 185p at the close of its first day of conditional trading. The company’s advisers, led by Citigroup, had hoped to price the shares as high as 245p.

Saga is owned by the private equity groups Permira, Charterhouse and CVC, which had planned to sell shares to raise capital. However, a lack of demand among the investor community meant that its owners will not sell down their holding but issue new shares, representing 27 per cent of the business.

Half of the shares on offer were bought by institutions such as pension funds, and the other half by retail investors. The £550m raised from the listing, before fees, will be used to pay down debt.

Lance Batchelor, the chief executive of Saga, said: “As a public company, owned in part by our customers, Saga will be even better positioned to continue helping the over-50s live life to the full.”

However, Saga’s sluggish start is the latest sign that the recent appetite for  flotations is abating, after the fashion retailer Fat Face pulled its listing on Thursday and other newly floated names, including Pets At Home and Just Eat, have seen their shares fall.

Chris Beauchamp, market analyst at the spread-betting firm IG, said: “The decision of [Saga] to float as a travel and leisure rather than insurance firm has dented enthusiasm among City investors.

Retail investors remain keen, however, and the likelihood is that we will see the shares move gradually higher as big institutions get over their initial disillusionment and start buying in earnest.”

One company that now looks unlikely to join the London Stock Exchange is the foreign currency group Travelex, which was yesterday bought by Bavaguthu Shetty, the owner of the money-transfer service UAE Exchange, and the Middle Eastern Centurion Investments in a deal thought to be worth £800m to £1bn.

Mr Shetty is also the founder and chief executive of the London-listed NMC Health and is worth about $880m (£525m), according to Forbes magazine.

Travelex’s founder, Lloyd Dorfman, who has known the Indian entrepreneur since the 1990s, will retain a small shareholding in the group and stay on as its president if the deal is completed. Before the sale, his holding in Travelex was thought to be worth about £300m ,with the majority of the group owned by the private equity firm Apax Partners. 

Mr Dorfman said: “This is a significant milestone for Travelex and for me personally.

Since I founded Travelex 38 years ago, we have grown from a single shop into an international brand recognised and respected around the globe. I am immensely proud of what we have achieved and am excited about the future.”

Stelios steps up EasyHotel plans listing

Sir Stelios Haji-Ioannu’s discount hotel chain easyHotel is planning to float, in a move that could value it at £100m.

The “super budget” hotel chain, set up by the founder of the low-cost airline easyJet, yesterday said that  it would seek to raise £60m on the London Stock Exchange’s junior Aim market.

EasyHotel said it is looking to raise capital to fund expansion across big European cities. It currently has 18 Hotels in Europe, plus two more in Dubai and Johannesburg, with beds in central London offered for less than £35 a night.

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