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Private equity firms circle UK over-50s holiday firm Saga

A number of private equity firms including Hg Capital, JP Morgan Partners and Candover are preparing to bid for Saga, the UK holiday company that specialises in insurance and holidays for the over-50s. The transaction is expected to be valued at around £1bn.

Saga achieved pre-tax profits of £48m in 2002 and some believe that the £1bn price tag, more than 20 times the profit generated, is therefore too high. But others believe that the valuation can be justified, as the company’s over-50s customer base is likely to grow rapidly over the next decade, according to a report by Reuters.

A number of other private equity firms are expected to join the bidding process over the next couple of weeks. The company is also considering a possible flotation in parallel to the sale process.

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