Float or sell-off - Saga's dilemma

OVER-50s holidays and insurance group Saga is pressing ahead with plans for a £1bn stock market float, but is not ruling out a sale of the business instead.

Talks have been under way with a number of private equity firms for some time and these are continuing, said chief executive Andrew Goodsell.

But the group has also decided to go ahead with flotation plans after encouraging noises from the City. 'Having spoken to a large number of institutions, we believe there is a real appetite to own a share in this company,' he said. A final decision on a sale or share float will be made next month.

Small investors have also reacted positively, with some 155,000 Saga customers and other members of the public indicating that they might be prepared to invest a total of between £356m and £777m in any share sale.

Saga was founded by Sydney de Haan in 1951, as the Old People's Travel Bureau, and is still 100% owned by the de Haan family, which will be selling its entire stake.

Should there be a rush for the shares, Saga customers will be given preference over other members of the public.

UBS Investment Bank has been appointed sole global co-ordinator and sponsor for the proposed offer and sole bookrunner for the institutional offer.

Citigroup Global Markets and Credit Suisse First Boston are co-lead managers.