Saga in talks over £3bn flotation

Saga is rumoured to be preparing for a £3bn stock market flotation in the new year, according to reports from the Sunday Times.

The insurance broker, which specialises in providing cover for the over-fifties, interviewed 10 investment banks last week about handling the flotation.

Private equity firm Charterhouse, which bought Saga for £1.3bn in 2004, and partner backers Permira and CVC are rumoured to be preparing to sell more than 25% of its shares on the stock market in 2014.

The deal could take place as soon as Q1, but sources told the Sunday Times that Saga’s backers may wait until the middle of the year to proceed with the deal.

Flotation would bring the end of Acromas, which was formed by the merger of Saga and the AA in a £6.2bn deal in 2007.

A break-up of Acromas has long been rumoured. Speculation intensified in June when AA issued bonds to refinance part of Acromas’s bank debt. This refinancing reduced the debt to £4.6bn from £6bn, although most of this is held by the AA, with Saga owing £1.5bn.

A spokesman for Saga said: “We don’t comment on market speculation and we are very focused on delivering the very best for our customers.”

Saga and AA’s insurance broking operations are big players in the UK general insurance market. The combined operation ranks fifth in the Insurance Times Top 50 Brokers.