Saga PLC Priced At 185p Despite Strong Retail Demand

A majority of customers will receive only half of the Saga PLC shares requested.

Mark Stones

Mark Stones (TMFMumbojumbones) joined The Motley Fool in 2014 and initially worked as a writer for Fool.co.uk, before joining the Fool’s analyst programme. Mark earned a BA in English from Loughborough University. Although he spends more time reading annual reports than Russian literature these days, he still appreciates a novelist’s antipathy toward the accepted view, which is a useful attitude when trying to sniff out hidden gems on the stock market. His approach to investing has been largely influenced by the principles of Warren Buffett and Peter Lynch. He also takes a special interest in the work of healthcare companies. Outside of investing, Mark plays guitar, enjoys good writing and has a guilty passion for combat sports.

Published 23 May, 2014 10:47 am BST

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The over-50s lifestyle group Saga (LSE: SAGA) confirmed this morning that it has priced its shares at 185p — valuing the company at £2.1bn.

This is at the bottom of the original of 185p to 245p price range, likely to avoid a steep slide in the share price, much like Just Eat and Poundland, which listed earlier this year.

Andrew Goodsell, Saga’s chairman, commented:

“We have been very pleased with the level of demand for Saga shares from both retail and institutional investors, with the offer subscribed several times over.”

“We are delighted to have so many of our customers as shareholders and to have a high quality group of core institutions who we believe will be long-term supporters of the business.”

Some 700,000 of Saga’s 2.1m customers registered an interest in receiving shares, so it is in the company’s own interest to try to underpin a positive aftermarket performance for retail investors — otherwise embittered customers could turn away from Saga products.

50% of Saga’s offer has been allocated to retail investors, while the other half has been allocated to institutions.

Shares in Saga, which generated £159m profit last year, will begin trading on 29 May. The minimum application amount of £1,000 will see customers receive 540 shares.